Top 5 least friendly tax states
5. Rhode Island
> Taxes collected per capita: $2,603 (18th highest)
> Unemployment: 9.1% (3rd highest)
> Corporate taxes collected per capita: $141 (18th highest)
> Sales tax rate: 7.00% (tied for 2nd highest)
Rhode Island received a poor grade in part because of its high corporate income tax rate, as well as some of the nation’s highest effective property tax rates. The state also had the worst-rated unemployment insurance tax policy in the country. According to the Tax Foundation, Rhode Island needs to cut taxes to make it more competitive. Governor Lincoln Chafee proposed cutting the state’s corporate income tax rate from 9% to 7%, but the plan eventually was rejected.
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4. Minnesota
> Taxes collected per capita: $3,557 (6th highest)
> Unemployment: 5.1% (10th lowest)
> Corporate taxes collected per capita: $188 (9th highest)
> Sales tax rate: 6.88% (7th highest)
Minnesota’s legislature increased its top individual income tax rate from 7.85% to 9.85% in May. Along with the state’s already poor rankings for corporate, individual income and unemployment insurance taxes, this change helped make Minnesota one of the least tax-friendly states for business. While Minnesota’s unfriendly tax climate would suggest it could kill business, the state’s economy recovered especially well since the recession. The state’s unemployment rate was 5.1% in August, compared with 7.3% nationally.
3. California
> Taxes collected per capita: $3,111 (11th highest)
> Unemployment: 8.9% (5th highest)
> Corporate taxes collected per capita: $256 (5th highest)
> Sales tax rate: 7.50% (the highest)
California has, according to the Tax Foundation, the worst individual income tax policy in the nation. The state has the highest top income tax in the United States, at 13.3%. It also has a graduated, rather than flat-rate, income tax system. Also, after combining the state sales tax and the average locally set sales taxes, California has the nation’s highest state sales tax rate as well. California was among the most damaged states by the recession. In 2012, Governor Jerry Brown succeeded in winning voter approval of tax increases on the wealthy that prevented massive cuts to school and university funding.
2. New Jersey
> Taxes collected per capita: $3,085 (12th highest)
> Unemployment: 8.5% (tied for 8th highest)
> Corporate taxes collected per capita: $252 (6th highest)
> Sales tax rate: 7.00% (tied for 2nd highest)
New Jersey is usually neck-and-neck with neighboring New York as the least tax-friendly state for business, according to the Tax Foundation. In this year’s ranking, New York fared worse than New Jersey, but only barely. New Jersey’s property tax policy ranked dead last, and the state collected $2,896 per capita in property taxes, the largest sum in the country. Its corporate income tax policies and individual income tax policies also ranked among the worst in the country.
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1. New York
> Taxes collected per capita: $3,497 (8th highest)
> Unemployment: 7.6% (18th highest)
> Corporate taxes collected per capita: $207 (8th highest)
> Sales tax rate: 4.00% (tied for 7th lowest)
The great irony about New York — the least tax-friendly state for business — is that New York City by itself is a world trade and finance center. However, the according to the Tax Foundation, the state’s tax policies are the worst in the state for keeping or attracting business. New York ranked worst in the country for receiving among the worst grades for unemployment insurance taxes and property taxes. The state’s corporate tax rate was actually rated 25th, but New York is dragged down by one of the worst scores for property, unemployment insurance and individual income taxes. In fiscal 2011, the state collected $1,864 in income taxes per capita. This was more than $1,000 above the U.S. average.
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The Least Tax-Friendly States for Business - 24/7 Wall St.
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