Vermont 46th in Tax Foundation business tax climate index

Vermont remains among the lowest ranked states in the Tax Foundation’s annual index of business tax climates. The state kept its 2013 position of 46th place, overall.

The Tax Foundation, based in Washington, D.C., analyzes state tax codes across more than 100 variables in five areas: corporate, individual income, sales, property and unemployment insurance taxes. Although Vermont rates very low overall, some of the state’s tax structures are better than others, according to the foundation.

Sales tax took 16th place for transparency and neutrality, while unemployment insurance taxes came in at 17th place. Corporate, individual income and property tax all weighed down the overall score, however, with rankings of 42nd, 44th and 48th, respectively.

Wyoming, South Dakota and Nevada took top honors nationwide. New Hampshire is the year’s best rated New England state, at 7th place. Massachusetts took 24th, followed by Maine at 33rd. Connecticut and Rhode Island scored just above Vermont in 42nd and 45th place, respectively.

Only New Jersey, New York, California and Minnesota scored worse than Vermont, overall.

The Tax Foundation offers its index as a road map for how states can improve their tax  structures with simplicity, and business-friendly systems.

“States are punished for overly complex, burdensome, and economically harmful tax codes but are rewarded for transparent and neutral tax codes that do not distort business decisions,” the press release said.

An analysis of the index in 2013 by GOVERNING Magazine, however, cautioned that the methodology has its flaws. For example, the fact that many taxes share a category but are applied differently in different states means direct comparison is not always accurate.

But the states in the bottom 10 nationwide all “suffer from the same afflictions,” according to the Tax Foundation’s complete 2015 report: complex, non-neutral taxes with comparatively high rates.

Hilary Niles

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