(The Center Square) – Ohio’s corporate tax and individual income tax continue to drag the state down when its business tax climate is compared to the rest of the country.
A new report from the Tax Foundation shows Ohio ranking well below average at 36th in the State Business Tax Climate Index, which authors say is designed to show how well states structure tax systems and give a path for improvement.
“Taxation is inevitable, but the specifics of a state’s tax structure matter greatly. The measure of total taxes paid is relevant, but other elements of a state tax system can also enhance or harm the competitiveness of a state’s business environment,” according to the report.
The report ranked states by evaluating the corporate tax, individual income tax, sales tax, property tax and unemployment insurance tax.
Ohio ranked outside the top 35 in corporate taxes (39), individual income tax (40) and sales tax (36). It scored best in property tax (5), followed by unemployment insurance tax (12).
The 10 best states included Wyoming, South Dakota, Alaska, Florida, Montana, New Hampshire, Nevada, Utah, North Carolina and Indiana.
“The absence of a major tax is a common factor among many of the top 10 states,” the report said. “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. 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 has no individual income tax; and New Hampshire and Montana have no sales tax. This does not mean, however, that a state cannot rank in the top 10 while still levying all the major taxes. Indiana and Utah, for example, levy all the major tax types but do so with low rates on broad bases.”
The worst state was New Jersey, followed by New York, California, Connecticut, Massachusetts, Maryland, Minnesota, Vermont, Hawaii and Rhode Island.