Low State Taxes Not Good For Business

The Tax Foundation has ranked the states based on their state tax burdens, with the highest tax burden states called those with the "chilliest business tax climate."

The trouble is that when you look at results, state tax burdens aren't tightly linked to economic growth or per capita income, although both economic growth and higher per capita income are slightly favored in high state tax states.

The Data

Slow growing states disproportionately have low state taxes. Fast growing states disproportionately have high state taxes.

Seven of the ten slowest growing states are in the lowest twenty-five in state tax burden; six of the ten fastest growing states are in the highest twenty-five in state tax burden.

Affluent states are slightly more likely to be high state tax states, while poor states are slightly more likely to be low state tax states.

Four of the ten most affluent states are in the bottom twenty-five in state tax burden; six of the ten most affluent states are in the top twenty-five in state tax burden. Five of the nine poorest states are in the bottom twenty-five in state tax burden; four of the nine poorest states are in the top twenty-five in state tax burden (a tie for 40th place leaves a poor of nine at the bottom).

More Details

The top ten and bottom ten by state tax burdens are below, followed in each case by state GDP percentage growth from 2006-2008 rank, and state per capita income rank (ties get the same, higher, rank).

Tax Rank - State - State GDP Growth Rank - State Per Capita Income

Low Tax States
1 South Dakota - 3 - 25
2 Alaska - 50 - 8
3 Wyoming - 2 - 5
4 Nevada - 41 - 17
5 Florida - 48 - 21
6 Montana - 14 - 39
7 New Hampshire - 14 - 10
8 Delaware - 48 - 18
9 Utah - 20 - 48
10 Indiana - 41 - 40

Six of the ten slowest growing states have the lowest state tax burdens, as do two of the ten fastest growing states.

One of the nine poorest states have the lowest state tax burdens, as do three of the ten most affluent states.

High Tax States
41 North Carolina - 37 - 40
42 Rhode Island - 46 - 16
43 Minnesota - 9 - 11
44 Maryland - 22 - 6
45 Iowa - 8 - 28
46 Ohio - 45 - 33
47 Connecticut - 40 - 1
48 New Jersey - 31 - 2
49 California - 34 - 9
50 New York - 18 - 4

Three of ten slowest growing states have the highest state tax burdens, as do two of the ten fastest growing states.

None of the nine poorest states have the highest state tax budens, while five of the ten most affluent states have the highest state tax burdens.

State Tax Ranking Of States In The Top or Bottom Ten By Other Measures:
11 Washington State - 9 - 13
12 Virginia - 22 - 7
13 Texas - 9 - 26
15 Colorado - 4 - 12
18 Idaho - 38 - 44
19 Kentucky - 39 - 47
21 Mississippi - 16 - 50
24 South Carolina - 31 - 45
25 Georgia - 41 - 38

One of the slowest growing states is in the next lowest fifteen states in state tax burden, three of the fastest growing states are in the next lowest fifteen states in state tax burden.

Four of the nine poorest states are in the next lowest fifteen states in state tax burden, one of the most affluent states are in the next lowest fifteen states in state tax burden.

30 Oklahoma - 5 - 34
32 Massachusetts - 13 - 3
33 New Mexico - 9 - 43
34 Arizona - 41 - 41
35 Kansas - 7 - 23
37 West Virginia - 6 - 49
39 Arkansas - 27 - 46

One of the ten slowest growing states is in the next highest fifteen states in state tax burden, four of the ten fastest growing states are in the next highest fifteen states in state tax burden.

Four of the nine poorest states are in the next highest fifteen states in state tax burden, one of the ten most affluent states are in the next highest fifteen states in state tax burden.