OAKTON, Va., and WELLESLEY, Mass. – The best of states or the worst? Rhode Island and Massachusetts are among the worst 10 states for small businesses, the Small Business & Entrepreneurship Council said this week in its 13th annual Small Business Survival Index. Yet Massachusetts is the best state in the country for entrepreneurs, according to a report yesterday Babson College.

Topping the SBE Council’s ranking were South Dakota, Nevada, Wyoming, Florida, Washington, Texas, South Carolina, Alabama, Virginia and Colorado. Holding down the bottom of the list were No. 40 West Virginia, followed by Hawaii, Iowa, Vermont, Massachusetts, New York, Minnesota, Rhode Island, Maine, California, No. 50 New Jersey and, worse than any state, by far, the District of Columbia.

The Survival Index is based on factors including population growth; internal migration between states; and taxes. Not considered were such factors as state and local business development efforts, work force development programs, education and access to public and private services.

“Taxes and regulation matter a great deal to entrepreneurs, small businesses and the economy in general,” wrote Raymond J. Keating, the SBE Council’s chief economist.

Factors broken out as separate lists included top rates for personal income taxes, in which Massachusetts ranked 22nd friendliest and Rhode Island 39th (lower tax rates were “business friendlier”); personal capital gains taxes, in which Massachusetts was 25th friendliest Rhode Island 41st; corporate capital gains taxes, in which Rhode Island was 45th and Massachusetts 49th; state and local property taxes, in which Massachusetts was 36th and Rhode Island 47th; adjusted unemployment taxes, in which Massachusetts was 36th and Rhode Island was 40th.

Also broken out were the crime rate, in which Rhode Island was 11th friendliest and Massachusetts 13th; the “number of health-insurance mandates,” in which Massachusetts was 35th and Rhode Island 37th; electric utility costs, in which Rhode Island was 47th and Massachusetts 49th; workers’ compensation benefits per $100 of covered wages, in which Massachusetts was third friendliest and Rhode Island 17th; the number of state and local government workers per 100 residents, in which Rhode Island was 10th friendliest and Massachusetts 12th; “highway cost-effectiveness,” in which Massachusetts was 43rd and Rhode Island 48th; the amount of state and local government spending per capita, in which Rhode Island was 43rd and Massachusetts 45th; the rate of increase in state and local government spending, in which Massachusetts was 35th and Rhode Island 47th. The study also ranked states by their gasoline tax, in which Massachusetts was 24th and Rhode Island was 38th friendliest; diesel-fuel tax, in which Massachusetts was 22nd and Rhode Island 38th; and state and local sales and excise taxes as a percent of personal income, in which Massachusetts was sixth friendliest and Rhode Island 20th.

“The U.S. economy is in a serious downturn, and the outlook for a robust recovery seems remote,” Keating wrote. “That means state and local policymakers face some very difficult decisions, especially on budget matters. Depending on the policy course that state lawmakers choose, they can either make the economic situation in their own state better or far worse."

Yet his study’s results were in sharp conflict with the report released yesterday at Babson College in Wellesley: “Massachusetts is No. 1 in the country in entrepreneurial activity,” President Leonard Schlesinger said in a statement as the college unveiled the 2008 Babson Entrepreneurship Monitor for the Commonwealth of Massachusetts.

The annual report, based on a period that ended in July, found that the Bay State has the nation’s highest rate of business creation.

“The combined rate of early- and late-stage entrepreneurial activity in Massachusetts is 23 percent, compared to 14.1 percent for the U.S. average,” its authors wrote. Among the factors cited as likely contributors were the “significant opportunities for technology transfer.”

Gov. Deval L. Patrick, who traveled to Wellesley to attend the Entrepreneurship Monitor’s release, lauded the report as “further evidence that our development strategies are creating significant opportunities for advancement and growth in Massachusetts.”

The SBE Council findings also contrasted with those of other recent studies:

• Rhode Island was No. 5 in the technology sector and Massachusetts was No. 1, according to the eighth Annual State Competitiveness Report – released last month by the Beacon Hill Institute, a think tank at Suffolk University – while in overall competitiveness, Massachusetts first nationwide and Rhode Island was 31st. (READ MORE)

• The Ocean State moved up to 11th place nationwide in the 2008 State New Economy Index – released last month by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation – while Massachusetts retained the No. 1 spot it has held since the index’s inception. (READ MORE)

• Similar contrasts are seen in rankings of the state’s largest metropolitan areas: Providence was 39th and Boston second in last week’s MarketWatch ranking of the best metro areas for business. (READ MORE) But metro Providence got high marks for business costs and the Boston area scored low in KPMG LP’s Competitive Alternatives 2008 Special Report, a global analysis released this summer. (READ MORE)

The Small Business & Entrepreneurship Council (SBE Council), based in Oakton, Va., is a nonprofit research and lobbying group founded to protect and support the small-business sector. Additional information – including the group’s full Small Business Survival Index 2008: Ranking the policy environment for entrepreneurship across the nation – is available at www.SBECouncil.org.

Information about Babson College – including the 2008 Babson Entrepreneurship Monitor for the Commonwealth of Massachusetts, released yesterday at the college in Wellesley, Mass. – is available at www.babson.edu.