California, New York and New Jersey rank as the worst states with comparatively high tax rates.
The Tax Foundation released its State Business Tax Climate Index this week, with Mississippi ranking 30th overall.
The Tax Foundation says the Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare.
“While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement,” the report summary states.
The Index ranks states as it pertains to Corporate Tax, Individual Income Tax, Sales Tax, Property Tax and Unemployment Insurance Tax. The Index ranked Mississippi as follows:
- Overall – 30th
- Corporate Tax – 13th
- Individual Income Tax – 25th
- Sales Tax – 32nd
- Property Tax – 38th
- Unemployment Insurance Tax – 6th
The Tax Foundation says tax competition is an unpleasant reality for state revenue and budget officials, but it is an effective restraint on state and local taxes.
“When a state imposes higher taxes than a neighboring state, businesses will cross the border to some extent. Therefore, states with more competitive tax systems score well in the Index because they are best suited to generate economic growth,” the reports states.
The 10 best states in this year’s Index are:
- South Dakota
- New Hampshire
The Index notes that the absence of a major tax is a common factor among many of the top 10 states.
“Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax,” the report notes.
The Index points out that Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida and Tennessee have no individual income tax; and New Hampshire and Montana have no sales tax.
Mississippi Governor Tate Reeves and Speaker Philip Gunn have advocated for the Legislature in the Magnolia State to eliminate the income tax. Doing so would surely move Mississippi up on this list.
The 10 lowest-ranked, or worst, states in this year’s Index are:
- New York
- New Jersey
You can read the full Index by clicking here.