State Business Tax Climate – 2022

The Tax Foundation released their 2022 State Business Tax Climate Index and coming in last….again:

The states in the bottom 10 tend to have a number of afflictions in common: complex,
nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered
by some of the highest property tax burdens in the country, has the highest corporate
income taxes and among the highest individual income taxes in the country, has a
particularly aggressive treatment of international income, levies an inheritance tax, and
maintains some of the nation’s worst-structured individual income taxes. (page 2)

Top Tax Rate. New Jersey’s 11.5 percent rate (including a temporary and retroactive
surcharge from 2020 to 2023) qualifies for the worst ranking among states that levy
one, followed by Pennsylvania’s 9.99 percent rate. Other states with comparatively high
corporate income tax rates are Iowa and Minnesota (both at 9.8 percent), Alaska (9.4
percent), Maine (8.93 percent), and California (8.84 percent). By contrast, North Carolina’s
rate of 2.5 percent is the lowest nationally, followed by Missouri’s at 4 percent, North
Dakota’s at 4.31 percent, and Florida at 4.458 percent. Other states with comparatively
low top corporate tax rates are Colorado (4.5 percent), Arizona and Indiana (both at 4.9
percent), Utah (4.95 percent), and Kentucky, Mississippi, and South Carolina, all at 5
percent. Oklahoma is scheduled to implement a 4 percent corporate income tax rate in
2022 and will soon join these ranks. (page 22)

Top Marginal Tax Rate. California has the highest top income tax rate of 13.3 percent.
Other states with high top rates include Hawaii (11.0 percent), New York (recently raised
to 10.9 percent), New Jersey (10.75 percent), Oregon (9.9 percent), Minnesota (9.85
percent), Vermont (8.75 percent), and Iowa (8.53 percent). (page 31)

States with the worst scores on the base subindex are Hawaii, Alabama, Washington,
California, South Dakota, New Jersey, New Mexico, and Maryland. Their tax systems
hamper economic growth by including too many business inputs, excluding too many
consumer goods and services, and imposing excessive rates of excise taxation. (page 41)

Effective Property Tax Rate. Property tax collections as a percent of personal income
are derived by dividing the Census Bureau’s figure for total property tax collections
by personal income in each state. This provides an effective property tax rate. States
with the highest effective rates and therefore the worst scores are New Hampshire
(5.47 percent), Vermont (5.12 percent), New Jersey (4.98 percent), Maine (4.61 percent),
Rhode Island (4.47 percent), and New York (4.41 percent). States that score well with low
effective tax rates are Alabama (1.4 percent), Oklahoma (1.68 percent), Tennessee (1.69
percent), Delaware (1.76 percent), Arkansas (1.79 percent), and Louisiana (1.93 percent). (page 47)

One response to this post.

  1. Posted by Denis Bouchard on January 5, 2022 at 3:45 pm

    And Murphy laughs it off as “If your looking for lower taxes …this state is not for you” we have a fool for governor

    Reply

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