Rhode Island Ranks 46th Worst for Business Tax Climate
Thursday, October 11, 2012
Rhode Island is again near the bottom of another national poll.
For the second consecutive year, the Ocean State ranked 46th worst the country when it comes to taxes on businesses, according to the ninth annual State Business Tax Climate Index released by the Tax Foundation.
The report collects data on over a hundred tax provisions for each state and synthesizes them into a single easy-to-use score. The states are then compared against each other, so that each state’s ranking is relative to actual policies in place in other states around the country.
The Index is designed to enable business leaders, government policymakers, and taxpayers to make an apples-to-apples comparison of their state’s tax system.
“Even in our global economy, a state’s strongest and most immediate competition often comes from other states,” said Tax Foundation economist Scott Drenkard. “State lawmakers need to be aware of how their states’ business climates match up to their immediate neighbors and to other states in their region.”
Rhode Island scored low marks in nearly every category (corporate tax, individual income tax, sales tax, unemployment insurance and property tax). The state ranked dead last when it comes to unemployment insurance. Its best ranking was No. 25 for sales tax.
At No. 47, Vermont was the only New England state with worse rating than Rhode Island while New Hampshire registered at No. 7. According to the report, Maine saw the greatest improvement of any state in the country, jumping from No. 37 to No. 30, thanks to a repeal of their alternative minimum tax. Massachusetts was ranked No. 22 while Connecticut ranked No. 40.
“The absence of a major tax is a dominant factor in vaulting many of these ten states to the top of the rankings,” the report states. “Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate tax, the individual income tax, or the sales tax.”
Wyoming, South Dakota, Nevada, which have no corporate or individual income tax, made up the top three states. Alaska, which has no individual income or state-level sales tax, and Florida, which has no individual income tax, rounded out the top five.
Although its corporate taxes are near the middle of the pack, New York ranked at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes, and the sixth-worst property taxes. New Jersey and California joined Vermont and Rhode Island in the bottom five.