Idaho has ranked No. 18 for the second year in a row on the Tax Foundation’s 2014 State Business Tax Climate Index.
The index ranks states’ tax systems in regards to how favorable they are to businesses. A rating of 1 means that the state’s tax climate is most favorable to businesses, and a rating of 50 means it is least favorable, according to the index.
Authors Scott Drenkard and Joseph Henchman recommend improving the long-term tax climate, rather than using tax incentives and subsidies to lure businesses one at a time.
The index weighs five taxes in order to determine a state’s tax climate. Individual income tax is weighted at 32.4 percent, sales tax at 21.5 percent, corporate tax at 20.2 percent, property tax at 14.4 percent and unemployment insurance tax at 11.5 percent.
Idaho ranked 23rd for individual income tax and sales tax, 18th for corporate tax, third for property tax, and 47th for unemployment insurance tax.
The top 10 states are Wyoming, South Dakota, Nevada, Alaska, Florida, Washington, Montana, New Hampshire, Utah and Indiana. While property and unemployment taxes are levied in every state, most of the top 10 states did not levy one of the other major taxes (corporate, individual income or sales). Indiana and Utah both levy all taxes, but with low rates on broad bases, the index states.
All of Idaho’s neighboring states outranked it on the index, with only Oregon, at No. 12, failing to crack the top 10.