North Carolina Tax Climate For Business 12th Worst in the Nation

A recent study by the non-partisan Tax Foundation shows that North Carolina is 12th most unfriendly state for doing business when it comes to the tax climate.  High taxes kill jobs and discourage new business.

A new study from the non-partisan Tax Foundation shows that New Jersey, New York, and California respectively are the states whose tax structure is the worst for business, a factor the foundation says drives businesses to other, more business-friendly states.

Released last week, the report ranks states based on how “business-friendly” their tax systems are, ranking them based on five different aspects of their tax systems: corporate, individual income, sales, unemployment insurance and property taxes.

Generally, the report found that the best types of tax systems were business-neutral, broad based, and transparent, and that states whose systems most reflected this ideal were the most competitive.

“The ideal tax system, whether at the local, state or federal level, is simple, transparent, stable, neutral to business activity, and pro-growth,” the study found.

Since reality never quite reflects this ideal, the Tax Foundation examined which states’ tax systems caused the least amount of economic distortions.

“In reality, tax-induced economic distortions are a fact of life, and a more realistic goal is to maximize the occasions when people’s economic decisions, whether in business or personal life, are guided by their own judgments, and minimize those cases where economic decisions are micromanaged or even dictated by a tax system,” the report explained.

“Therefore, the most competitive tax systems, and the ones that score best in the SBTCI [State Business Tax Climate Index],” according to the study, “are those that create the fewest economic distortions by enforcing the most simple, pro-growth tax systems characterized by broad bases and low rates.” …

The report concluded that while every state government must tax, no state government must do so in a way that dampens its economy.

“Every state must raise revenue, and thus every state must tax,” said the report. “No state, however, needs to tax in a way that has significant adverse effects on the business climate. A state needs to continually strive for a tax system that is neutral and pro-growth.”

“A neutral tax system is one in which specific economic activities are not targeted for exemptions or selective taxes. A pro-growth system will avoid excessive taxes and compliance costs on businesses.”

The complete rankings, best to worst, are as follows:

South Dakota
Wyoming
Alaska
Nevada
Florida
Montana
New Hampshire
Delaware
Washington
Utah
Texas
Indiana
Colorado
Oregon
Virginia
Missouri
Michigan
Idaho
Alabama
Kentucky
Mississippi
Tennessee
New Mexico
Hawaii
North Dakota
South Carolina
Pennsylvania
Arizona
Georgia
Illinois
Oklahoma
Kansas
Nebraska
Maine
Louisiana
Massachusetts
West Virginia
Connecticut
North Carolina
Arkansas
Vermont
Wisconsin
Minnesota
Rhode Island
Maryland
Iowa
Ohio
California
New York
New Jersey

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