New Yorkers who fall in love with Wyoming’s natural beauty during visits to Jackson Hole have another reason to consider relocating. For the fifth year in a row, the Cowboy State will take the top ranking in the Tax Foundation’s State Business Tax Climate Index, due out Wednesday.
Wyoming is followed closely by South Dakota and it’s easy to see why. Both states collect neither an individual nor corporate income tax. Rounding out the top five are Alaska, Florida and Nevada, which also have no income tax.
A northeasterner thinking of putting down roots in one of these friendly climes wouldn’t be the first. Providing a powerful incentive to go west, New Jersey once again finished dead last, slightly worse than 49th-ranked New York.
Among the 10 worst states in this year’s index, not one appears on the Census Bureau’s most recent list of the 10 fastest growing states by population. That is unless you count the District of Columbia, where residents can enjoy living off the fat of all 50 states.
Outside of Washington, D.C., where the flow of wealth is often involuntary, Americans are voting with their feet for lower taxes and more freedom. Among the top 10 states with the most friendly business tax climates, four appear on the Census list of top 10 population boomers, with three more in the top 20.
New Jersey is a particular disappointment given that Republican Governor Chris Christie has been talking about reform since his 2009 election campaign. The Tax Foundation notes that the Garden State has the “highest property tax burdens in the country” and is one of just two states to levy both an inheritance tax and an estate tax, plus “some of the worst-structured individual income taxes in the country.” Maybe reform will come next decade.
A more hopeful story is Indiana, where reforms under former Governor Mitch Daniels and current Governor and GOP Vice Presidential candidate Mike Pence have given Hoosiers the eighth best business tax climate in the country. If elected this fall, Mr. Pence is promising to do for the United States what he’s been doing in Indiana. The plan is to stash America’s corporate income tax rate, which is the industrialized world’s highest, to make it among the most competitive. That would mean a more favorable business climate in every state.
Speaking of the presidential campaign, the Tax Foundation helpfully instructs state politicians that while foreign competition generates headlines, it is the competition with other states that is often most significant. “The Department of Labor reports that most mass job relocations are from one U.S. state to another rather than to a foreign location,” notes the foundation. State lawmakers “need to be more concerned with companies moving from Detroit, Michigan, to Dayton, Ohio, than from Detroit to New Delhi.”
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