CALIFORNIA BUSINESS MINUTE
Best and Worst Tax Systems
11-02-10
Hi, I am Tim Johnson and welcome to the California Business Minute.
The Tax Foundation has released its annual ranking of the best and worst tax
systems in the nation for 2010 and unfortunately California continues it low
standing.
South Dakota's tax system is most welcoming to economic activity while New York's
tax code ranks 50th as the least hospitable.
"States do not enact tax changes in a vacuum," said Scott Hodge, president of the
Tax Foundation. "Every tax change will affect a state's competitive position
relative to its neighbors." The goal of this ranking is to focus lawmakers'
attention on the importance of good tax fundamentals, enacting low tax rates
and granting as few deductions, exemptions and credits as possible. This "broad
base, low rate" approach is the antithesis of most efforts by state economic
development departments who specialize in designing "packages" of short-term
tax abatements, exemptions, and other give-aways for prospective employers who
have announced that they would consider relocating. Those packages routinely
include such large state and local exemptions that resident businesses must pay
higher taxes to make up for the lost revenue according to Hodge.
New York is ranked as the state with the worst tax system at #50. It is followed
by California, New Jersey, Ohio, Iowa, Maryland, Rhode Island, Minnesota,
Wisconsin and Vermont.
On the flip side, South Dakota is ranked as the state with the best tax system
ranked at #1. It is followed by Wyoming, Alaska, Nevada, Florida, Montana,
New Hampshire, Delaware, Washington and Utah.
I am Tim Johnson and this has been the California Business Minute.
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