Best And Worst States: Taxes And Regulations

The Top Five And The Bottom Five

When starting a solution provider business an entrepreneur has a lot to think about. What an entrepreneur doesn't want to have to think about it is taxes and red tape.

Our overall analysis of the best and worst states in which to start a business included an examination of the states with the highest and lowest tax and regulatory burdens for businesses. The examination looked at such criteria as a state's corporate tax rate and related factors, property taxes, regulatory environment, and tax incentives for job creation, research and development, and other business investments. Information sources included reports from the Tax Foundation, the Federation of Tax Administrators, and Forbes Best States For Business.

The criteria and metrics used were weighted to reflect their importance to solution providers based on the results of a survey CRN conducted among 250 solution providers in February 2013. The first five states have the highest scores (No. 5 to No. 1), followed by the five with the worst rankings (No. 46 to No. 50) on overall taxes and regulation.

Best States No. 5: South Carolina

South Carolina's 5.00 percent corporate income tax rate and other factors rank the state a generally favorable No. 10 in overall corporate taxes, while the state is ranked No. 15 for its property taxes. The state is ranked a high No. 5 for its lenient regulatory environment.

Best States No. 4: Georgia

Georgia's 6.00 percent corporate income tax rate and other factors rank the state No. 9 in overall corporate taxes, while the state is ranked No. 18 for its property taxes. Georgia is ranked No. 2 for its business-friendly regulatory environment.

Best States No. 3: Oklahoma

Oklahoma's 6.00 percent corporate income tax rate and other factors rank the state No. 12 in overall corporate taxes, while the state is ranked No. 4 for its low property taxes. Oklahoma is ranked No. 14 for its regulatory environment.

Best States No. 2: Alabama

Alabama's 5.00 percent corporate income tax rate and other factors rank the state No. 17 in overall corporate taxes, while the state is ranked No. 1 for its low property taxes. Alabama is ranked No. 7 for its regulatory environment.

Best States No. 1: Utah

If you're looking for the state with the lowest tax and regulatory burden, then you want to head to Utah. The Beehive State ranks No. 1 for having the lowest overall taxes and most favorable regulatory environment for businesses.

The state's 5.00 percent corporate income tax rate and other factors rank the state No. 5 in overall corporate taxes, while the state is ranked No. 10 for its property taxes. Utah is ranked No. 6 for its regulatory environment.

Utah's overall ranking gets a boost for its generous tax incentives and credits for job creation, research and development, and other investments.

Worst States No. 46: Maine

Maine's 8.93 percent corporate income tax rate and other factors rank the state No. 41 in overall corporate taxes, while the state is ranked No. 40 for its relatively high property taxes. Maine is ranked No. 46 for its regulatory environment.

Worst States No. 47: New Hampshire

New Hampshire likes to portray itself as a low-tax, low-regulations state. And while that may be true in a comparison with neighboring Massachusetts, the state doesn't fare so well among the 50 states, ranking No. 47 for the overall tax and regulatory burden it places on businesses.

The state's 8.50 percent corporate income tax rate and other factors rank the state No. 48 in overall corporate taxes, while the state is ranked No. 47 for its relatively high property taxes. New Hampshire is ranked No. 41 for its regulatory environment.

(New Hampshire considers itself a low-tax state because it has a relatively low personal income tax and no sales tax. In the CRN analysis such taxes were included under the personal taxes/quality of life category.)

Worst States No. 48: Rhode Island

Rhode Island's 9.00 percent corporate income tax rate and other factors rank the state No. 42 in overall corporate taxes, while the state is ranked No. 44 for its relatively high property taxes. Rhode Island is ranked No. 50 -- dead last among all states -- for its regulatory environment.

Worst States No. 49: Vermont

Vermont's 8.50 percent corporate income tax rate and other factors rank the state No. 43 in overall corporate taxes, while the state is ranked No. 45 for its relatively high property taxes. Vermont is ranked No. 49 for its regulatory environment.

Worst States No. 50: Massachusetts

Massachusetts was once derided as "Taxachusetts" and the CRN analysis shows things haven't changed all that much. The state's recent imposition of a 6.25 percent tax on computer software services is evidence of that. Massachusetts came in dead last (No. 50) among all the states for the tax and regulatory burden it places on businesses.

To be fair, Massachusetts isn't the worst across the board. The state's 8.00 percent corporate income tax rate isn't the highest -- that and other factors rank the state No. 33 in overall corporate taxes. The state is ranked No. 43 for its property taxes and No. 42 for its regulatory environment.