Written By: Anthony Michael, Project Manager at AngelouEconomics | What is the Economic Impact of your state’s business tax climate?
State business taxes matter. As business owners, public servants, and employees, we all know that even the slightest change to taxes or tax structures can lead to major implications. Businesses seek to locate in areas that will provide them the greatest competitive advantage. State taxes factor into these calculations, as they can either impede or positively impact business operations.
Consider the Texas Growth Miracle. In a time where the U.S. economy was in a deep recession, Texas was creating jobs. In fact, the state was a driving force behind national employment growth. From 2008 to 2014, the U.S. gained 1.7 million jobs. By comparison, Texas gained 951,000 jobs – accounting for 55% of total growth. Sure, this period coincided with a boom in the oil and gas sector, an industry which fuels the Texas economy. But it’s tough to argue against then Governor Rick Perry’s approach to taxes, regulation, and economic development.
“We were the engine of growth because we had a simple formula: control taxes and spending, implement smart regulations, invest in an educated workforce, and stop frivolous lawsuits”.
Another important aspect of state business tax climates is the fact that when changes occur, they have global implications. Each day, states compete with other states and countries to attract business expansions and relocations. Any changes, whether positive or negative, impact that state’s competitive standing.
2018 State Business Tax Climate Index
Each year, the Tax Foundation releases its State Business Tax Climate Index to gauge how state’s tax systems compare to one another. What’s impressive about this index, among the others, is that it is designed to, “show how well states structure their tax systems”. Meaning this index incorporates both quantitative and qualitative measures, like tax rates and the relative complexity of a state’s tax code.
The Index is built from five tax components:
- Individual Income Tax
- Sales Tax
- Corporate Income Tax
- Property Tax
- Unemployment Insurance Tax
AngelouEconomics mapped the 2018 State Business Tax Climate Index across all 50 states to illustrate how state’s compare to one another. Take some time to scroll through the visualization to see state’s overall index rankings, as well as rankings for each of the five tax components.
If you would like to learn more about your state’s business tax climate or how AngelouEconomics helps firms assess business taxes across multiple locations, send us an email at info@angeloueconomics.com
About AngelouEconomics:
AngelouEconomics has worked with numerous professional and business associations in building dozens of unique economic impact studies among other types of projects including site selection projects as well as strategic economic development projects. Some projects have examined the effects of statewide policy measures, such as the Texas Bathroom Bill or ban on Sanctuary Cities. Other projects have measured the contribution of member networks in terms of jobs, wages, and total economic output. Like this study for Prospera, a nonprofit organization which specializes in providing bilingual assistance to Hispanic entrepreneurs in Florida. Economic impact studies are effective tools for quantifying and illustrating the value of individual professional and business associations. They are versatile, as they can illustrate the value or impact of a specific policy or quantify the economic contribution of your members to the local, regional, and nationwide economies.
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If you would like to learn more send us an email at info@angeloueconomics.com
