A national tax research group determined recently that Indiana is the 10th-best state when it comes to taxes that impact businesses.
The Tax Foundation, a nonprofit, nonpartisan tax research organization based in Washington, D.C., last week released its annual State Business Tax Climate Index, which ranks all 50 states.
“By ranking in the top 10, Indiana has clearly been a leader in creating a nonthreatening tax environment for individuals and corporations,” said Michael Cummings, interim president of Dubois Strong, Dubois County’s economic development organization. “As word continues to spread about Indiana’s favorable tax climate, the state should see more and more corporate relocations and direct investment from businesses looking to control costs.”
The index compares states in five areas of taxation that impact business: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes, and taxes on property, including residential and commercial property.
The nine states doing better than Indiana are, in order, Wyoming, South Dakota, Nevada, Alaska, Florida, Washington, Montana, New Hampshire and Utah.
The state’s rating is an asset for all counties, including Dubois County, Cummings said.
“Having a great tax climate is just one more talking point we can use to demonstrate the benefits of doing business in our community as opposed to across state lines,” he said. “Add in the local property tax phase-ins available in our communities, and Dubois County suddenly has one of the most financially competitive locations to do business in the Midwest. IIt will definitely help us retain existing companies and, hopefully, attract new ones.”
This is the 10th year that the Tax Foundation has compiled the list. For the first time since the index ratings have been determined, Texas dropped out of the top 10. Indiana rose one spot, pushing Texas to 11th place, foundation spokesman Richard Borean said in a news release.
The states that were in 41st to 50th place, in order, were Maryland, Connecticut, Wisconsin, North Carolina, Vermont, Rhode Island, Minnesota, California, New Jersey and New York.
“The states that lost ground this year usually did so because they changed policy in a way that makes the tax code more complex, burdensome or economically harmful,” said Scott Drenkard, an economist for the foundation. “By contrast, the states that improved did so because they are moving closer to a tax code that collects revenue without unnecessarily distorting business decisions. Their tax codes became more neutral.”
Cummings said that a better comparison for Indiana would be among the states that are nearby.
“More important for Indiana than just making the Top 10 is that our state is clearly the best business tax climate in the Midwest,” he said. “Hopefully, this ensures that our companies won’t be lured to neighboring states with their operations and investments.”
The rankings of Indiana’s neighbors found Michigan in 14th place, Kentucky in 27th, Illinois in 31st and Ohio in 39th.
Gov. Mike Pence said that Indiana’s placement showed that the state is making strides to be more business friendly.
“We are grateful for the recognition of the progress Hoosiers have made. When it comes to state business tax climate, Indiana’s ranking as 10th in the nation by the Tax Foundation is further evidence that we are on the right track in cutting taxes and reducing regulatory burden,” he wrote in an email to The Herald. “As we continue to build upon our pro-business, pro-growth policies in the years ahead, we will continue to create the kind of environment in which businesses and Hoosiers alike can grow and thrive in Indiana.”
The Tax Foundation collects data on more than 100 tax provisions for each state and synthesizes them into a single score. The states are then compared against each other, so that each state’s ranking is relative to actual policies in place in other states across the country, Borean said.
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