The Tax Foundation is an independent tax policy nonprofit organization that has studied and researched tax policy since 1937. It reviewed the 2017 tax climates in each of the fifty states and ranked them overall based on five categories: corporate tax, individual income, sales tax, unemployment insurance tax, and property tax. In the near future, we will address the state tax climates of New York, New Jersey, and Connecticut.
The purpose of the Tax Foundation State Business Tax Climate Index is to enable business owners, policymakers, and taxpayers evaluate how their states’ tax systems compare to others. The Tax Foundation’s rankings are designed to show how well state tax systems are structured, rather than simply rank the states by the amount of taxes assessed.
The top ten states are:
- Wyoming
- South Dakota
- Alaska
- Florida
- Nevada
- Montana
- New Hampshire
- Indiana
- Utah
- Oregon
While unemployment insurance taxes and property taxes are levied in every state, it is the absence of a major tax such as the corporate income tax, individual income tax, or sales tax that is a common variable in the states that have one of the nation’s top ten tax climates. Some states, like Indiana and Utah, made the top ten despite the fact that they levy all of the major types of taxes, but do so with lower rates.
More than a few states do not have one or more of the major taxes. While Alaska has no individual income or state-level sales tax, Wyoming, Nevada, and South Dakota have no corporate or individual income tax. New Hampshire, Montana, and Oregon have no sales tax and, as many people know, Florida levies no individual income tax; this (and the weather) is why many individuals with higher incomes, especially athletes, tend to relocate there.
The states with the worst tax climates all seem to have complex, non-neutral taxes with comparatively high rates. The ten worst state tax climates are:
- Louisiana
- Maryland
- Connecticut
- Rhode Island
- Ohio
- Minnesota
- Vermont
- California
- New York
- New Jersey
Notably, all three states which comprise the Tri-State area have significantly poor tax climates, with New York and New Jersey both ranked at the bottom of the list and Connecticut not much better at 43rd. One reason why New Jersey may rank at the bottom is that it is one of only two states to levy both an inheritance tax and an estate tax.
It is wise for individual and business taxpayers located in New York, New Jersey, or Connecticut to consult with a tax professional to help assess their current tax situation, looking ahead to the future. If you have any question about taxes, especially in planning ahead for the next filing season, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
