WASHINGTON – Rhode Island ranked dead last among the 50 states in the 2008 State Business Tax Climate Index, released today by the Tax Foundation, while Massachusetts moved up three slots to 34th. The index, which ranks states by how “business friendly” their tax systems are, is to be presented tomorrow in Portland, Maine, at the annual meeting of the State Policy Network.

It was the Ocean State’s third consecutive year at the bottom of the list; the state was ranked 49th in the 2003 and 2004 editions. Rounding out the bottom 10 this year were New Jersey, at 49; New York, 48; California, 47; Ohio, 46; Iowa, 45; Vermont, 44; Nebraska, 43; Minnesota, 42; and Maine, 41.

Top 10 states in the 2008 listing were Wyoming, at No. 1, followed by South Dakota, Nevada, Alaska, Florida, Montana, New Hampshire, Texas, Delaware and Oregon.

“There’s no question that states are competing with one another for companies, jobs and people,” Curtis S. Dubay, who co-authored the study report with Chris Atkins, said in a statement today. “Taxes matter to businesses, and the states with better business tax climates will reap the rewards. … If they’re standing still, they’re losing ground to states actively improving their climates.”

The index – now in its fifth year – is “based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment tax and property tax,” the foundation said in announcing its findings. “The states are scored on these taxes, and the scores are weighted based on the relative importance or impact of the tax to a business.”

Rhode Island ranked 50th in the Unemployment Insurance Tax Index, 48th in the Property Tax Index, 47th in the Individual Income Tax Index, 34th in the Corporate Tax Index and 33rd in the Sales Tax Index.

In Massachusetts, high rankings in two categories offset low scores in the other three. The Bay State was ranked 49th in unemployment taxes, 45th in property taxes, 15th in individual taxes, 46th in corporate taxes and 8th in sales taxes.

“How much states collect in taxes is critical, but how they take it is also important,” Atkins and Dubay wrote in their report. “In other words, quite apart from whether a state’s total tax burden is higher than in other states, it can enact (and many states do) a set of tax laws that cause great damage to the economy.”

They describe the tax incentives and subsidies lawmakers often use to lure businesses as “a dangerous proposition,” adding: “if a state needs to offer such packages, it is most likely covering for a woeful business climate plagued by bad tax policy. A far more effective approach is to systematically improve the business tax climate for the long term.”

The Tax Foundation, founded in 1937, is a nonprofit nonpartisan tax research organization based in Washington, D.C., whose goals include the promotion of simplicity, transparency, stability and neutrality in U.S. tax policies. To learn more, visit www.taxfoundation.org.