R.I. again ranks among worst states for business tax climate

PROVIDENCE – Rhode Island again ranks among the worst states for its taxes on businesses, according to the 2015 edition of the State Business Tax Climate Index, released Tuesday by the nonpartisan Tax Foundation.
The Ocean State’s rank at No. 45 improved one spot from last October. Among the New England states, only Vermont, at No. 46, was lower.
The index measures how well structured each state’s code is by analyzing more than 100 tax variables in five different categories: corporate, individual income, sales, property and unemployment insurance taxes.
“States are punished for overly complex, burdensome and economically harmful tax codes but are rewarded for transparent and neutral tax codes that do not distort business decisions,” the press release about the index states.
Rhode Island’s score includes, on a scale of 1 being the best and 50, the worst:

  • Corporate tax structure: 43
  • Individual income tax structure: 38
  • Sales tax structure: 26
  • Property tax structure: 47
  • Unemployment insurance tax structure: 49

The report makes note that Rhode Island policymakers this year approved a reduction in the state’s corporate income tax rate from 9 percent to 7 percent, which will take effect on Jan. 1.

The top 10 states, according to the index are: Wyoming, South Dakota, Nevada, Alaska, Florida, Montana, New Hampshire, Indiana, Utah and Texas. The report said the “absence of a major tax is a common factor among many of the top 10 states.”
The bottom 10 are: Iowa, Connecticut, Wisconsin, Ohio, Rhode Island, Vermont, Minnesota, California, New York and New Jersey. “The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates,” the report stated.
Maine dropped five places since last October to No. 33, due to an increased state sales tax. As for the other New England states, Massachusetts ranked No. 24, dropping one place from last year, and Connecticut ranked No. 42, also down one spot from last year.

New Hampshire (No. 7) and Vermont were unchanged in their rankings from last year.

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The State Business Tax Climate Index’s goal is to start a conversation between taxpayers and policymakers about how their states fare against the rest of the country.

Read the full report HERE.

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