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The Best and Worst States for Small-Business Taxes
High corporate income taxes or sales taxes can be a huge challenge for small businesses, depending on where they are located. So where does your state stack up?
Posted 2/ 19 11 at 11:00 AM | News, Money, Sales, Taxes & Accounting, Legal Issues
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Location, location, location: It's not only important when it comes to where you live or where you set up shop -- it affects the taxes you pay on business profits, the sales taxes your customers pay and the property taxes you pay on your facilities (directly as a property owner or indirectly through rent).So how does your location compare with other states? Each year, the Tax Foundation, a Washington, D.C.-based nonpartisan research group, conducts a survey to rank the states, factoring in corporate tax, personal income tax, sales tax, property tax and unemployment insurance tax.
Here are the results of the 2011 Small Business Tax Climate Index.
Best States for Small-Business Taxes
What makes a "good" tax state? Not having one or more major taxes -- corporate income taxes, personal income taxes, sales tax -- is important for a favorable tax climate. Low property taxes and low unemployment taxes that employers pay on wages to their staffs are also factors.
The best states for small businesses from a tax perspective are:
1. South Dakota: No corporate or individual income tax
2. Alaska: No individual income tax or state sales tax (there are some local sales taxes)
3. Wyoming: No corporate or individual income tax
4. Nevada: No corporate or personal income tax
5. Florida: No personal income tax
Worst States for Small-Business Taxes
What makes a "bad" tax state? These are the states that have complex tax rules with high tax rates.
The worst states for small businesses:
1. New York: The third-worst personal income tax, the ninth-worst sales tax and the very worst property tax
2. California: The second-worst sales tax and the third-worst personal income tax
3. New Jersey: The third-worst property tax and fifth-worst personal income tax
4. Connecticut: The second-worst property tax and, with the enactment of its "millionaire's tax," the third-worst personal income tax
5. Ohio: The fifth-worst property tax and the sixth-worst income tax
New Jersey had been at the bottom of the list for four consecutive years, but eliminating the top two personal income tax brackets so that the top rate fell from 10.75 percent to 8.97 percent moved it up in the rankings.
Barbara Weltman is an attorney, author of several business books including J.K. Lasser's Small Business Taxes and trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day and monthly e-newsletter Big Ideas for Small Business, both available at www.barbaraweltman.com, and host of Build Your Business radio. Follow her on Twitter at Twitter.com/BarbaraWeltman.
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Comments (Page 3 of 3)
Jim, superb point of view. Too bad you are the exception. Well done.
I own a business in Texas. Texas has created more jobs in this economy than all the other states in the US combined. How do Texas do this while everyone flounders? It's a right to work state with low personal and business taxes. Maybe America should look at how Texas does business!
Thank you very much for the information, my son will be moving to texas shortly. He said the very same thing and now I believe him. CVS
JIm: I like your message, it makes sense. However, no one in their right mind would contradict the reasons for taxation; however, in New Jersey for years, there has been corruption and theft within our government for many years. It has gotten out of hand, the Governor is right. We have paid the price. But when the price does not equal the services, it is time to make changes. Our educational system is defunct especially in our larger cities due to corruption at the higher levels with overpaid administrators and superintendents and in some cases teachers. I have neighbors who work for the school system locally, years ago when the boards and unions asked for rediculous retirement and salary increases, we the middle classes paid the prices. At that time I asked, how can we possibly pay for this? Check it out. In some cases, teachers with ten children to teach find it hard to communicate and send trouble makers to the principals office where an administrator deals with them because the teachers are afraid to confront problem children. Parents do not train their children in good habits and comportment. I doubt that they even know what that means. I like our governor and I believe he is fair and understands the frustrations of the middle classes. Check out Camden, Newark, Trenton and look at the salaries of the top administrators in the school system and the salaries of the Union Leaders, who pays them. We do and we are tired of the wining about how many children the poor teachers have to put up with (ten to 12?) Are they nuts? In the '50's we had classes of 36 to 78 students. Teachers knew how to teach and how to handle them. Our colleges are full of upcoming students who are looking to go into teaching because you can retire after 10 years and get a couple of different pension options in the other world out there. Wise up. I love my country, I vote in every election. Nothing is ever perfect but we can affect change when we vote properly and insist on desclosures and incorruptable ethics from those we vote in. Get rid of school boards and let the public vote for improvements within their own school districts.
Well, odd isn't it? the States with the Higest taxes are the Most Populated? and the one's with the most businesses?
I would guess their is a better way to provide the services and get the Taxes /$ to pay for them, but the system is so set in concrete and It's really the Unions behind they costing so much, I doubt we will ever be able to straighten them out.. That's what they are trying to do now In Wi. and I hope they do.. then all the other states can follow suit..
at least eliminate one major reason for such high taxes..
For awhile at least..but not forever I'm sure..
But paying Grade and HS teachers College level Professor level Salaries and Beneifts is just too much and unions have gone way overboard in almost all other Union Related Professions..
WHERE DOES HAWAII FIT IN? MANDATORY HEALTH CARE FOR BUSINESSES WITH 20 OR MORE EMPLOYEES, AND TAXED TO DEATH. HAWAII SHOWS THE REST OF THE NATION HOW BARRYCARE WILL NOT WORK.... ANOTHER SINKING STATE, RULED BY INCOMPETENT DEMOCRATS. AKAKA, INOYE, AND THE DUFUS THAT JUST BECAME GOVERNOR
I will back the Union's in this country. What's happening is corporate America trying to take out all Unions. Look at what happened to us out in Silicon Valley, CA..Not that we're a,Union hot bed of unrest. These corporations are totally putting the screws to this nations high technology workers by sending them off to massive unemployment lines, yet turn and claim they can't find workers in this country to fill all the positions they have. This has got to be one of the biggest lies ever parapeted.
What they should have said was, "Can't find American workers for what they're willing to pay."
Corporations have our immigration department by the balls and pretty much tell "immigration" What they want". Today, And I'm telling you like it is...This entire area now looks like another Mumbia from all the East Indians they have imported into this country. American worker in the millions, now off any assistance from collecting unemployment are not even factored into our current unemployment statistics. Good Lord! Please people wake the hell up to what is really going on here.
I know so many skilled workers out of jobs...It's all about destroying this country from the inside out, and inside in. And QUIT putting it on Obama, he's nothing more than a whipping boy here.
Corporate America and Wall Street and the Banks are where we need to be finger pointing.
This mess is no more Democratic nor Republican...Both are to blame.
Iowa is not mentioned because anyone with a brain left. The government is actually hostile toward small business. They are big chain store and State casino friendly. If your not in those two catagories they will drive you out of the state. Now they are after Ma and Pa restaraunts and Bars. From the looks of Des Moines in the last five years most small businesses have closed.
I would throw Pennsylvania in there too. They are probably one of the worst just in the way the state sends out compliance paperwork and then expects you to figure it out.