(The Center Square) – Utah has one of the most favorable tax climates for businesses in the nation, according to a new report.
The state landed in the top ten of the Tax Foundation’s index measuring how well states structure their tax systems. It takes into account a state’s individual income tax, sales tax, corporate income tax, property tax, and unemployment insurance tax.
Many of the top states received high rankings due to the absence of a major tax, like a corporate income tax or individual income tax. However, that was not the case with Utah. Though Utah does levy all the major taxes, it does so with lower rates, enabling it to still make it into the top ten, the report said.
Utah ranked 8th overall. For corporate taxes it ranked 14th and on individual taxes it was 10th. The state performed its worst for its sales tax, ranking at 22. Utah’s property taxes ranked 8th, and its unemployment insurance tax ranked 16, up one spot from the last index report.
Two neighboring states outperformed Utah. Wyoming came in at the very top of the list as best in the nation and Nevada placed 7th.
The index is meant to help business leaders, government policymakers, and taxpayers see how tax systems compare between states. The authors of the report said many states’ toughest competition is often from other states.
“Tax competition is an unpleasant reality for state revenue and budget officials, but it is an effective restraint on state and local taxes,” the authors wrote. “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 Department of Labor reported most mass job relocations are from one U.S. state to another, not foreign locations.
Top performing states also included South Dakota, Alaska, Florida, and Montana. The lowest ranked states were Maryland, Connecticut, California, New York, and New Jersey.
