Virginia leads region in business tax climate

WASHINGTON — Virginia leads the region when it comes to the business tax climate, according to an index released Tuesday by the Tax Foundation. The rest of the area ranks lower on the list, with Maryland and D.C. near the bottom.

The State Business Tax Index examines each state’s tax code and several variables, looking at corporate, individual income, sales, property and unemployment insurance categories.

The Tax Foundation then ranks states, taking away points for overly complex, economically harmful tax codes, and awarding them for transparent tax codes. The goal is to help taxpayers and policymakers assess how their states compare to others.

Virginia was ranked 27th in the country, dropping from 26th place last year. For its corporate tax structure, the Commonwealth came in sixth, but earned 39th place for its individual income tax structure.

Maryland came in at 40th place. Its sales tax structure earned the state points, bringing it up to 8th place in that category. However, its individual income and property tax structures were in the bottom ten. Overall, Maryland held onto its same ranking from last year.

D.C.’s strongest category, according to the index, was its unemployment insurance tax structure, at 27th in the country. The District dropped one place from last year to 45th this year, and its property tax structure was among the lowest at 44th place. However, because D.C is not a state, its score is not on the final list. The Tax Foundation says D.C.’s ranking does not affect the states.

The absence of a major tax is what commonly pushes states to the top of the list. For example, Wyoming, South Dakota and Nevada – which earned top points – have no corporate or individual income tax.

In the bottom ten, the Tax Foundation said states such as New Jersey, New York and California have complex, non-neutral taxes. According to the organization, New Jersey has some of the highest property taxes and is one of just two states to impose both an inheritance and an estate tax.

The 10 highest ranked states this year:

1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. Montana
7. New Hampshire
8. Indiana
9. Utah
10. Texas

The 10 lowest ranked states this year:

1. Iowa
2. Connecticut
3. Wisconsin
4. Ohio
5. Rhode Island
6. Vermont
7. Minnesota
8. California
9. New York
10. New Jersey

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