CALIFORNIA BUSINESS MINUTE
Best and Worst Tax Systems
12-05-11
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 California continues it low ranking.
South Dakota's tax system continues to be the most welcoming to economic activity
while New York's tax code continues to be ranked as the worst ranked at 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.
Most states with the worst rankings remained the same year-over-year. New York
is ranked as the state with the worst tax system at #50. It is followed
by California, New Jersey, Connecticut, Ohio, Iowa, Maryland, Minnesota, Rhode
Island, North Carolina and Wisconsin. Of interest, Connecticut wasn’t even in
the bottom ten last year.
On the flip side, Most states with the best rankings remained the same year-
over-year. South Dakota is ranked as the state with the best tax system
at #1. It was followed by Alaska, Wyoming, Nevada, Florida, Montana,
New Hampshire, Delaware, Utah. Indiana was added while the state of Washington
fell out of the top states.
The CBM believes this year's study failed to take into the account the reduction in
California's sales tax and vehicle license fees, a fact not left on the increased positive
on last week's ranking of California's business climate on the annual Small Business
Survival Index, (see 12-02-11 Minute).
Additionally, to see last year's rankings of Best/Worst Taxed, go to Main Menu (orange
colored bar above) place cursor over 4thQtr10, wait for drop down menu then scroll down
to "11-02-10 Best/Worst Taxed."
I am Tim Johnson and this has been the California Business Minute.
|
