The Most Tax-Friendly States for Business

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The Least Tax-Friendly States

10. Maryland
> Taxes collected per capita: $2,756 (15th highest)
> Unemployment: 6.7% (tied–20th lowest)
> Corporate taxes collected per capita: $134 (19th highest)
> Sales tax rate: 6.0% (tied-16th highest)

Despite having the 10th-best business tax climate in the country, Maryland actually has a relatively high corporate tax rate. However, its rank for individual tax rates was the sixth-lowest of all states. Maryland’s weak business climate may be driving some companies away, according the Tax Foundation. Northrop Grumman chose Virginia instead of Maryland due to the state’s comparably attractive tax climate.

9. Iowa
> Taxes collected per capita: $2,368 (24th highest)
> Unemployment: 5.0% (6th lowest)
> Corporate taxes collected per capita: $82 (15th lowest)
> Sales tax rate: 6.0% (tied-16th highest)

Iowa was rated by the Tax Foundation as having the second least favorable corporate taxes in the country, as it has a corporate income tax rate of 12% — the highest in the nation. Despite these heavy taxes, Iowa collected just $82 per capita in taxes from corporations in 2011, versus an average of $129 per capita in all states. Iowa benefitted from one of the nation’s lowest unemployment rates, which means more people earn a regular paycheck and have more money to spend — potentially driving up tax revenue.

Also Read: America’s Most Content (and Miserable) Cities

8. Wisconsin
> Taxes collected per capita: $2,692 (17th highest)
> Unemployment: 7.0% (tied-24th lowest)
> Corporate taxes collected per capita: $149 (16th highest)
> Sales tax rate: 5.0% (20th lowest)

Wisconsin’s income tax policy was the fifth-worst of all states for business, according to the Tax Foundation. Wisconsin collected $149 in corporate income taxes per capita, in the top third of all states. In addition, the state brought in $1,128 in individual income taxes per capita, the 10th highest of all states. The Tax foundation lists Wisconsin as a state where job growth has been hampered by taxes. The state’s unemployment rate, however, was lower than the national rate in January.

7. North Carolina
> Taxes collected per capita: $2,332 (24th lowest)
> Unemployment: 9.5% (tied-4th highest)
> Corporate taxes collected per capita: $114 (25th highest)
> Sales tax rate: 4.75% (16th lowest)

North Carolina ranked as the fourth worst state in the nation for the impact of sales tax policies on businesses. On the other hand, the state has the nation’s highest excise tax on gasoline sales at 37.5 cents per gallon. This is especially negative for businesses, according to the Tax Foundation, because gasoline is a necessity for many businesses. Additionally, the state ranks among the worst for its individual income tax policies.

6. Minnesota
> Taxes collected per capita: $3,557 (6th highest)
> Unemployment: 5.6% (tied-11th lowest)
> Corporate taxes collected per capita: $188 (9th highest)
> Sales tax rate: 6.875% (7th highest)

Minnesota ranked seventh worst in both corporate taxes and individual income taxes. Minnesota collected $3,557 in per capita tax revenue, more than all but five states. The state collected $1,404 per capita from individual income taxes alone, more than all but four states. Minnesota is one of a handful of states across the country where lawmakers are weighing a shift toward higher sales taxes and away from personal income taxes. Yet state sales taxes are already higher than most states — the 6.875% state sales tax rate is the seventh-highest in the nation.