Out of Control Policy Blog

The tax burden on business

The Council on State Taxation just released a study on state and local taxation of businesses, with some interesting analysis. One clear lesson is that when the pressure is on to raise taxes, businesses better duck!

--Businesses paid 65 percent of the entire increase in state and local taxes from FY2000 to FY2003.

--In 5 states--South Carolina, Massachusetts, California, Wisconsin, Idaho, Michigan--100% of the tax increases during this decade were on businesses.

--In fact, in 75% of the states, busineeses bore more than 50% tax increases.

--During that period the big guns were out for business in Wyoming, where business taxes went up 20%! New Hampshire was close behind with a 17% hike.

--Meanwhile in Alaska, business taxes were cut 10%, and Connecticut by 1%.

But then, in Alaska, business taxes are 77% of state and local taxation, the highest proportion in the nation. Wyoming is second at 69%

The study ranks states by business taxation levels in several different ways--very handy. The measure I like best--states ranked by business taxes per employee gives you Alaska with the highest per employee business tax burden, and Utah with the lowest.

Adrian Moore is Vice President, Policy


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