The Tax Foundation’s annual State Business Tax Climate Index analyzes more than 100 tax variables in five categories—corporate, individual, income, sales, property and unemployment insurance taxes—to determine how each state’s tax code compares to the rest. According to the foundation, the more complex, burdensome and economically harmful the tax code is, the worse the state’s score. States with transparent and neutral tax codes that don’t distort business decisions, however, earn better rankings.
Here’s how Virginia stacked up in the 2016 report:
6th in corporate taxes
39th in individual income taxes
6th in sales taxes
38th in unemployment insurance taxes
29th in property taxes
Most neighboring states fared better than Virginia, with the exception of Maryland at No. 41. Kentucky ranked 28th, North Carolina ranked 15th, Tennessee ranked 16th and West Virginia ranked 21st.
“The evidence shows that states with the best tax systems will be the most competitive at attracting new businesses and most effective at generating economic and employment growth,” the study says. “…unlike changes to a state’s healthcare, transportation, or education systems, which can take decades to implement, changes to the tax code can quickly improve a state’s business climate.”
To read the full study, visit http://taxfoundation.org/article/2016-state-business-tax-climate-index.