The Most Tax-Friendly States for Business

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5. Florida
> Taxes collected per capita: $1,718 (7th lowest)
> Unemployment: 7.8% (18th highest)
> Corporate taxes collected per capita: $99 (21st lowest)
> Sales tax rate: 6.0% (16th highest)

Florida has no individual income tax. In addition, the state has a 5.5% flat corporate tax rate, lower than most states that levy one. Since Governor Rick Scott took office in January 2011, he has worked to eliminate the corporate tax rate altogether. Although unsuccessful, he has managed to allow corporations to deduct up to $50,000 in profits from taxes, meaning that half of the state’s corporations pay no tax at all. The state collected just $1,718 in taxes per capita in 2011, lower than all but seven other states. More than a quarter of the state’s total revenue haul came from state sales taxes. The state brought in $1,021 in sales tax revenue per capita in 2011, higher than all but five states.

4. Alaska
> Taxes collected per capita: $7,708 (the highest)
> Unemployment: 6.7% (tied-20th lowest)
> Corporate taxes collected per capita: $1,003 (the highest)
> Sales tax rate: none (the lowest)

Alaska is one of only seven states in the U.S. that does not collect income taxes. Despite this, Alaska collected $17,630 in total revenue per capita, by far higher than any other state in the country. Most of Alaska’s revenue is from taxes on oil and gas. The economy in Alaska has been performing considerably better than most states. The state’s unemployment rate of 6.7% in January 2013 was considerably lower than the 7.9% across the country.

Also Read: Companies Paying the Least in Taxes

3. Nevada
> Taxes collected per capita: $2,333 (25th lowest)
> Unemployment: 9.7% (3rd highest)
> Corporate taxes collected per capita: none (the lowest)
> Sales tax rate: 6.85% (8th highest)

Nevada doesn’t collect any individual or corporate income taxes. To make up for this, the state has a sales tax rate of 6.85%, the eighth-highest of all states. In addition, a sizable chunk of the state’s revenue comes from taxes on gambling revenue. Tax revenue in January 2013 was down by more than 11% compared to the same month in 2012. A ballot initiative raising the state’s gaming tax from 6.75% to 9% was devised in 2012. However, the measure never made it to the voters because a judge found the tax inadequately explained what it would accomplish.

2. South Dakota
> Taxes collected per capita: $1,682 (3rd lowest)
> Unemployment: 4.4% (3rd lowest)
> Corporate taxes collected per capita: $19 (5th lowest)
> Sales tax rate: 4.0% (tied-13th lowest)

South Dakota is one of the seven states without an individual income tax. In addition, the state only collected $19 per capita of corporate income tax in 2011, lower than all other states excluding the four states that do not collect corporate taxes. Because of these low taxes, the state only collected $1,682 per capita in 2011, lower than all but two other states. More than half of that money was collected in the form of sales taxes. In 2011, the state collected $985 in sales tax revenue per capita, the eighth-highest of all states. In January 2013, South Dakota had an unemployment rate of just 4.4%, lower than all states except for North Dakota and Nebraska.

1. Wyoming
> Taxes collected per capita: $4,347 (3rd highest)
> Unemployment: 4.9% (5th lowest)
> Corporate taxes collected per capita: none (the lowest)
> Sales tax rate: 4.0% (tied-13th lowest)

Wyoming is the highest-rated state in the nation for business tax policy. Like other states with strong business tax climates, it benefits from the absence of any individual income tax. Like Nevada and South Dakota, which ranked just behind Wyoming for the quality of their business tax climate, Wyoming has neither corporate income tax nor gross receipts tax. But while other states that did not tax income choose instead to tax sales heavily, Wyoming does not. As of January, its state sales tax rate was just 4%, one of the lowest of any state with such a tax. Including the average local sales tax, consumers paid an effective sales tax rate of just 5.3% on purchases, among the lowest in the nation.

Also Read: Companies Paying the Most in Taxes

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