Last month, the non-partisan Tax Foundation released its 11th annual State Business Tax Climate Index. Maine received a below-average rank, coming in at 33rd.
In the 2015 Index, the Tax Foundation analysed tax data from all 50 states on over 100 variables, and then scored each state on different types of taxes; e.g. sales, property, and individual income. Each state was ranked based on its cumulative score.
Wyoming was named the number 1 state in the nation for business tax climate, with the fact that there is no corporate or individual income tax in the state being a key factor.
“The absence of a major tax is a common factor among many of the top ten states,” the authors of the Index, Scott Drenkard and Joseph Henchman, note. “Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate tax, the individual income tax, or the sales tax.”
Rounding out the bottom of the list we’re California, New York, and New Jersey. The low rankings were a combination of the number of taxes in these states, their complexity, and the abnormally high rates.
Maine dropped 5 places in the rankings this year, falling from 28th to 33rd. “The Pine Tree State’s rank has dropped five places from its 28th place ranking last October due to an increased state sales tax,” said the Tax Foundation in a press release. “Since the last edition of the Index, Maine is the only state to enact a general sales tax increase.” Improvements to the tax structure of North Carolina and Nebraska contributed to the change.
[READ MORE about Maine’s sales tax increase…]
Since 2012, Maine had been rapidly moving up on the Index’s rankings. While in 2012, the state barely escaped the bottom 10 with a ranking of 37, the next two years saw the state move up to 28. Drenkard and Henchman attribute this change to the “repeal of their alternative minimum tax and a change in treatment of net operating losses[.]” Governor Paul R. LePage cited the improved ranking in the Index as a result of his administration, although he argued that the state could do better.
“To really claim that I was successful as a governor is to leave this office having Maine’s taxes at 25th in the nation,” LePage said in an interview with the Bangor Daily News.
The sales tax increase, which effectively reversed Maine’s improved rankings, was originally vetoed by Gov. LePage. However, the veto was overridden and the increase was passed into law.
A breakdown of Maine’s ranking is below:
Corporate tax structure: 45th
Individual income tax structure: 22nd
Sales tax structure: 9th
Property tax structure: 40th
Unemployment insurance tax structure: 42nd
Comments