Report ranks Montana 6th in nation for business tax climate
Montana has the sixth-best business tax climate in the U.S., according to a report from the Tax Foundation, a Washington, D.C.-based nonprofit think tank.
The Tax Foundation’s 2015 State Business Tax Climate Index takes into account over 100 variables, including corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes.
Wyoming ranked No. 1 on the list, and New Jersey ranked 50th.
According to the report, 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 several states do without one or more of the other major taxes. Wyoming has no corporate or individual income tax, and Montana has no sales tax.
Indiana and Utah rank in the top 10 while still levying all the major taxes, but they do so with low rates on broad population bases.
According to the Tax Foundation, many of the lower-ranking states have complex, non-neutral taxes with comparatively high rates. New Jersey has some of the highest property tax burdens in the country and is one of just two states to levy both an inheritance and an estate tax.
Montana ranks 18th for corporate taxes and 20th for individual income tax. However, the state placed 3rd for sales tax, 18th for unemployment insurance tax and 8th for property tax.
South Dakota, Nevada, Alaska and Florida ranked 2-5 on the list, respectively.
New Hampshire, like Montana, has no sales tax and finished 7th.
The study’s authors claim that “evidence shows that states with the best tax systems will be the most competitive at attracting new businesses and most effective at generating economic and employment growth.”
The authors admit that factors like raw materials, infrastructure and a skilled labor pool all matter to business owners, but “a simple, sensible tax system can positively impact business operations with regard to these resources.”
The report states that tax competition is an unpleasant reality for state revenue and budget officials, but it is an effective restraint on state and local taxes.
Many of the Tax Foundation’s board of directors include people with conservative ties. For example, one current board member is Douglas Holtz-Eaken, a former chief economic adviser to John McCain during his presidential run in 2008. Other board members have ties to former President George Bush.
