R.I. business tax climate ranks 46th in country, worst in N.E.

RHODE ISLAND'S business tax policies placed in the bottom five states in the country yet again, but this year bumped up one spot to No. 46 from No. 47 last year, the Tax Foundation reported Wednesday. / COURTESY TAX FOUNDATION
RHODE ISLAND'S business tax policies placed in the bottom five states in the country yet again, but this year bumped up one spot to No. 46 from No. 47 last year, the Tax Foundation reported Wednesday. / COURTESY TAX FOUNDATION

PROVIDENCE – Rhode Island ranks among the worst states for taxes on business, according to the 2014 State Business Tax Climate Index released by the Tax Foundation Wednesday.

The non-partisan tax policy research group collects data on more than 100 tax provisions for each state and synthesizes them into a single score, then compares states against each other, so that each state’s ranking is relative to policies in place in other states around the country.

Rhode Island placed at No. 46 in the country overall – moving up one spot from No. 47 in the revised 2013 ranking – and achieved the worst score among New England states. Nationwide, only Minnesota, California, New Jersey and New York ranked lower.

“The goal of the State Business Tax Climate Index is to start a conversation with policymakers about how their states fare against the rest of the country,” said Tax Foundation economist Scott Drenkard. “With this report, we’re asking, ‘How well is your tax code structured? Are businesses in your state spending too much time complying with onerous tax provisions? Are you double-taxing things you shouldn’t?’”

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Rhode Island’s 2014 score included:

  • Corporate tax rank: 43
  • Individual income tax rank: 36
  • Sales tax rank: 27
  • Unemployment insurance tax rank: 50
  • Property tax rank: 46

Massachusetts was the only New England state to lose ground in this year’s ranking, dropping one spot to No. 25 from its revised 2013 rank of No. 24.

Massachusetts’ 2014 score included:

  • Corporate tax rank: 34
  • Individual income tax rank: 13
  • Sales tax rank: 17
  • Unemployment insurance tax rank: 49
  • Property tax rank: 47

Connecticut and Vermont each jumped up one spot in the 2014 report, landing at No. 42 and No. 45, respectively. Maine and New Hampshire held at their 2013 rankings of No. 29 and No. 8, respectively.

The top five U.S. states in this year’s ranking were Wyoming, South Dakota, Nevada, Alaska and Florida.

“The states that lost ground this year usually did so because they changed policy in a way that makes the tax code more complex, burdensome or economically harmful,” said Drenkard. “By contrast, the states that improved did so because they are moved closer to a tax code that collects revenue without unnecessarily distorting business decisions. Their tax codes became more neutral.”

The 2014 Index represents the tax climate of each state as of July 1, 2013, the first day of the standard 2014 state fiscal year.

To see the full report, visit www.taxfoundation.org.

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1 COMMENT

  1. Interestingly, states with the lowest taxes also have the poorest schools, lowest-wage jobs, and unhealthiest job-seekers.

    If Rhode Island had good schools and highly technical jobs to match those of other high-tax states, then perhaps the high taxes would be justified.