A Tax Foundation report last week ranked South Carolina 37th among states for business-friendly tax climate.
Wyoming, South Dakota and Nevada were the top three. California, New Jersey and New York were at the bottom. Most at the top received their high rankings because they lacked at least one of three major taxes: corporate tax, individual income tax or sales tax. Some in the top 10 did levy all three taxes, but at significantly low rates.
South Carolina received higher rankings in some specific areas. The state was No. 10 in corporate tax, No. 22 in sales tax, No. 21 in property tax and No. 30 in unemployment insurance tax. However, it ranked near the bottom in individual income tax at No. 40.
Policy changes can make a big difference, and extensive tax reforms in North Carolina will move that state from 44th overall to “as high as 17th as these reforms take effect in coming years.”
The Tax Foundation, a Washington, D.C.-based research group, has compared the tax systems across states for 10 years. The authors noted that the biggest job relocations are from one state to another, and “even in our global economy, states’ stiffest and most direct competition often comes from other states.”
Its findings are similar to a report released by the Michigan-based Anderson Economic Group (AEG) earlier this year. South Carolina ranked 43rd in that study, putting it among the states with the highest business tax burdens. That report compared the amount of tax businesses paid to their pre-tax operating margin, using different metrics and more categories such as taxes on resource extraction. In our state, 12.8 percent of businesses’ operating margins went to taxes.
The entire detailed studies can be found at taxfoundation.org and andersoneconomicgroup.com.
