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Are you living in a High-Tax State?

Written By: Jason Shafrin - Oct• 09•12

Each year, the Tax Foundation ranks states based on their business tax climate. The full report is available here.

The 10 best states in this year’s Index are:

  1. Wyoming
  2. South Dakota
  3. Nevada
  4. Alaska
  5. Florida
  6. Washington
  7. New Hampshire
  8. Montana
  9. Texas
  10. Utah

Why are these the top-ranked states? “Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.”

Which states bottom-out the Tax Foundation’s list?

  1. Maryland
  2. Iowa
  3. Wisconsin
  4. North Carolina
  5. Minnesota
  6. Rhode Island
  7. Vermont
  8. California
  9. New Jersey
  10. New York

New York scores at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes, and the sixth-worst property taxes. The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.

The rankings compare states on 118 different variables in the five important areas of taxation: major business taxes, individual income taxes, sales taxes, unemployment insurance taxes, and property taxes.  Each state is ranked along each dimension on a relative scale from 0 to 10, with zero meaning not “worst possible” but rather worst among the fifty states.  To create the overall score, the Tax Foundation methodology weights these five components are as follows:

  • 33.1% — Individual Income Tax
  • 21.5% — Sales Tax
  • 20.1% — Corporate Tax
  • 14.0% — Property Tax
  • 11.4% — Unemployment Insurance Tax

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