Florida won high marks for its tax climate in a report released Wednesday by the Tax Foundation and Gov. Rick Scotts team is spreading the news.
The State Business Tax Climate Index ranked Florida fifth in the nation for tax climate in 2014, the same place the Sunshine State held in the last report released last year.
Red states dominated the top 10. Wyoming led the nation followed by South Dakota, Nevada, Alaska, Florida, Washington, Montana, New Hampshire, Utah and Indiana. Blue states dominated the bottom 10 with New York ranked as the worst tax climate in the nation followed by New Jersey, California, Minnesota, Rhode Island, Vermont, North Carolina, Wisconsin, Connecticut and Maryland.
Florida scored points on a number of fronts. According to the report, Florida led the nation on individual income taxes, helping build a better tax climate. Florida ranked sixth in the nation for its unemployment insurance taxes and placed 13 on corporate tax ranks. The Sunshine State was slightly hurt by its property tax rank -- where it placed 16th -- and sales tax where it ranked 18th in the nation.
The goal of the State Business Tax Climate Index is to start a conversation with policymakers about how their states fare against the rest of the country, said Scott Drenkard, an economist with the Tax Foundation. With this report, were asking: How well is your tax code structured? Are businesses in your state spending too much time complying with onerous tax provisions? Are you double taxing things you shouldnt?
There was some movement among the states. Kansas, now led by conservative Republican Gov. Sam Brownback, moved up from 26 last year to 20 in the current ranks. Arizona also rose up the ranks, moving from 27 last year to 22 in the new report.
Other states slipped down the rankings. Texas, which had placed in the top 10 each of the nine times the Tax Foundation released the report before, is now ranked in 11th place. Virginia slipped down three notches from 23 last year to 26 in the rankings released on Wednesday. Kentucky also dropped down three places, moving from 24 last year to 27 in the current rankings.
Drenkard insisted that states like Virginia and Kentucky that dropped in the rankings enacted policies that hurt their economy on taxes while states like Kansas and Arizona pursued policies that helped businesses.
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, Drenkard said. 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.
Drenkard teamed up with Joseph Henchman from the Tax Foundation to write the report.
Scotts camp forwarded the study on Wednesday with the governors office sending out the information as part of their Its Working campaign. The Republican Party of Florida (RPOF) also showcased the study and noted that Scott had reached out to businesses located in states with much worse tax and business climates.
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