The 10 worst states for taxes
A state's tax climate can affect not only how far dollars stretch but also whether businesses want to locate there.
Paying more this year
With the passage of the fiscal cliff deal and the expiration of the payroll tax holiday, most Americans will be paying more taxes this year -- but the hike could hurt more depending on what state you live in.
The Tax Foundation's 2013 State Business Tax Climate report recently ranked the best and worst states for taxes to enable business leaders, policymakers and taxpayers understand how their states measure up. The 10 best include low-population, Western states including Wyoming and South Dakota, as well as a few eastern states like New Hampshire and Florida. And what did they have in common? They had low rates or lacked one of the five major taxes -- individual income, corporate, property, sales or unemployment insurance.
According to the report, the lesson is simple: A state that raises sufficient revenue without one of the major taxes, all things being equal, has an advantage over those states that levy every tax in the book. They'll be more competitive in attracting new business and more effective at generating economic and employment growth, since high taxes are a turn-off for both businesses and individuals.
The 10 worst all levied complex, non-neutral taxes that favor some economic activities over others and have comparatively high individual and corporate tax rates.
"Multiple layers of data (show) that domestic migration occurs consistently away from high tax states," says Mat Franken, founder of ResidencyHQ, a resource for residency information. "Our data points to high-tax states losing residents to low-tax states."
No. 1: New York （纽约）
And the winner for the worst state for taxes is . . . the Empire State. It's the worst state in the country when it comes to individual income taxes, likely due to its high top marginal tax rate of 8.82%. It ranks 45th for both unemployment insurance taxes and property taxes, and 38th for sales taxes. (It also has the highest tobacco taxes in the country -- $4.35 per pack of cigarettes.) Its best score was 23rd for corporate tax rates. New York was also among the top five outbound states in the United Van Lines migration study.
No. 2: New Jersey（新泽西）
With the exception of unemployment insurance taxes, New Jersey scores poorly in every category -- corporate, individual, sales and property taxes -- making it the second-worst state for taxes overall. In a 2012 migration study by moving company United Van Lines, New Jersey was the outbound leader for 2012.
No. 3: California（加州）
The Golden State isn't so golden when it comes to taxes. It's the second highest in individual income taxes and sixth highest in corporate taxes. It has the 11th-highest sales taxes. In 2005, California-based Intel even decided to build a multibillion-dollar chip-making facility in Arizona due to its favorable corporate income tax system. To make matters worse, in November, California voters passed Proposition 30, preventing planned cuts to education spending by raising the state sales tax from 7.25% to 7.5% for four years and adding four new income tax brackets to the existing seven. A new top income tax rate of 13.3% (up from the current 10.3%) is effective for seven years and retroactive to January 1, 2012.
No. 4: Vermont（佛蒙特州）
Vermont gets slammed for high property taxes, which are the third highest in the nation with a 5.27 % effective rate. The state's high individual income tax rate (the top marginal individual income tax is 8.95%) and high corporate tax rates helped it earn its spot as the fourth-worst tax state in the nation.
No. 5: Rhode Island（罗得岛）
This state has the dubious distinction of being the worst state for unemployment insurance taxes: It taxes employers in a variety of ways for unemployment insurance, with a number of different tax rates and surtaxes. Moreover, its 4.88% effective rate for property taxes is ranked 46th. The state also ranks 42nd for corporate taxes, with a 9% corporate rate. Rhode Island has the nation's second-highest cigarette tax -- $3.50 per pack of cigarettes.
No. 6: Minnesota（明尼苏达）
Minnesota's ranking takes a beating for its corporate tax rate, which is among the highest in the nation at 9.8% and is ranked 44th out of 50 states. Minnesota is also 44th in individual income taxes, 40th in unemployment insurance taxes and 35th in sales taxes. Minnesota not only has an Alternative Minimum Tax on individual incomes, but also has an AMT on corporations.
No. 7: North Carolina（北卡罗琳娜）
North Carolina is the seventh-worst state overall, and it is also the eighth worst for individual income tax rates and the fourth worst for sales taxes. However, the state's corporate taxes are decent (ranking 29th) and unemployment insurance taxes rank fifth in the nation.
No. 8: Wisconsin （威斯康星）
Wisconsin is the fifth-worst state for individual income tax rates and ranks 32nd in corporate and 33rd in property taxes. Wisconsin also imposes an Alternative Minimum Tax on individuals. According to the report, states that have mimicked the federal AMT have put themselves at a competitive disadvantage through needless tax complexity.
No. 9: Iowa（爱荷华）
The Hawkeye State gets a black eye for being the second-worst state for corporate taxes, with a 12% rate. It also ranks 37th in property taxes, 33rd in individual income taxes and 34th in unemployment insurance taxes.
No. 10: Maryland（马里兰）
What earned Maryland its place among the bottom dwellers? It's the sixth-worst state for individual income taxes, fifth-worst for unemployment insurance and the 11th-worst state for property taxes. Its one bright spot is its sales tax, where it ranked the eighth-best state due to minimal local sales taxes. According to the report, Northrop Grumman chose to move its headquarters from Maryland to Virginia, citing the better business tax climate there.
