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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

October 9, 2012 at 10:06 AM

Tax report: Washington sixth best state for business

Despite the griping you hear sometimes, Washington is one of the best states in the country in which to run a business because of its relatively low taxes.

That’s according to the Tax Foundation, a non-partisan research group based in Washington, D.C., that annually reports on states’ business tax climate.

Washington state ranked sixth in the group’s state business tax climate index released today.

That’s largely because Washington doesn’t have an income tax. That outweighs the state’s sales tax situation, which is ranked among the nation’s worst. Its corporate, property and unemployment insurance tax rates rank roughly average.

The top ranked states, in order, are Wyoming, South Dakota, Nevada, Alaska and Florida.

If you in factor in climate and quality of life, Washington would vault to first place. No wonder so many companies choose to locate and expand here.

Oregon is 13th and Idaho is 20th on the list.

We’ll see if this report is featured in any gubernatorial debates. Elected officials ought to keep it in mind when they’re pressed for additional tax breaks and threatened with the specter of companies relocating to more tax friendly locales.

The report notes that special incentives for companies don’t work as well as improving the overall business climate:

“Lawmakers create these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for a woeful business tax climate. A far more effective approach is to systematically improve the business tax climate for the long term so as to improve the state’s competitiveness.”

index_web_large.jpg

Here are the top 10 states:

1. Wyoming

2. South Dakota

3. Nevada

4. Alaska

5. Florida

6. Washington

7. New Hampshire

8. Montana

9. Texas

10.Utah

New York has the worst business tax climate, with New Jersey and California in second- and third-worst.

Here are the states with the 10 worst business tax climates

41. Maryland

42. Iowa

43. Wisconsin

44. North Carolina

45. Minnesota

46. Rhode Island

47. Vermont

48. California

49. New Jersey

50. New York

Here’s the full report. A chart ranking various taxes within the states is on Page 3: 2013_Index.pdf

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