Hawaii Ranks 30th Best on Business Taxes
Annual Release of the State Business Tax Climate Index
News Release from The Tax Foundation
Washington, DC (Oct 28, 2014)—Hawaii has the 30th best tax climate in the U.S. according to the latest edition of the State Business Tax Climate Index, released this morning by the nonpartisan Tax Foundation. The Aloha State’s rank remains unchanged from its 30th place ranking last October.
The Index, now in its 11th edition, measures how well structured each state’s code is by analyzing over 100 tax variables in five different categories: corporate, individual income, sales, property, and unemployment insurance taxes. States are punished for overly complex, burdensome, and economically harmful tax codes but are rewarded for transparent and neutral tax codes that do not distort business decisions. A state’s ranking can rise or fall significantly not only because of its own actions, but also because of changes or reforms made in other states.
The breakdown of Hawaii’s ranking this year is as follows (1st is best, 50th is worst):
- Hawaii’s overall State Business Tax Climate ranking: 30th
- Corporate tax structure: 9th
- Individual income tax structure: 37th
- Sales tax structure: 15th
- Property tax structure: 12th
- Unemployment insurance tax structure: 28th
“The federal government is gridlocked, but state policymakers on both sides of the aisle are enacting truly fundamental reforms,” said Tax Foundation Economist and Manager of State Projects Scott Drenkard. “States are doing their part and it’s time that Washington steps up.”
The report’s key findings include:
The 10 most competitive states are: Wyoming (#1), South Dakota (#2), Nevada (#3), Alaska (#4), Florida (#5), Montana (#6), New Hampshire (#7), Indiana (#8), Utah (#9) and Texas (#10).
The 10 least competitive states are: New Jersey (#50), New York (#49), California (#48), Minnesota (#47), Vermont (#46), Rhode Island (#45), Ohio (#44), Wisconsin (#43), Connecticut (#42), and Iowa (#41).
The most notable ranking changes occurred in North Carolina, Nebraska, North Dakota, New York, Wisconsin, Maine, and Kansas (see state specific press releases for more details).
The goal of the State Business Tax Climate Index is to start a conversation between taxpayers and policymakers about how their states fare against the rest of the country. This report helps answer the questions:
- How well is your tax code structured?
- How competitive is your state compared to the rest of the county?
- Are businesses in your state spending too much time complying with onerous tax provisions?
- Are you double taxing things you shouldn’t?
Full Report: 2015 State Business Tax Climate Index
The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.
* * * * *
Hawaii Ranks 30th in Business Tax Climate
Ranking unchanged from 2013, highlights lack of economic reform
From Grassroot Institute
HONOLULU, HAWAII--Oct. 28, 2014--A side-by-side comparison of state tax structures has ranked Hawaii thirtieth in the nation on its business tax climate, a position that is unchanged from 2013.
The study, which was conducted by the State Tax Foundation, examined five major elements of each state's tax system: Corporate Taxes, Individual Income Taxes, Sales Tax, Unemployment Insurance Tax, and Property Tax. Although a number of states rose or fell in the this year's index due to policy reforms and efforts to improve the state economy and business climate, Hawaii's ranking is unchanged from 2013, reflecting the lack of action in this area over the past year. Hawaii's overall ranking was thirtieth, with its poorest showings in Individual Income Tax (ranked 37) and Unemployment Insurance Tax (ranked 28).
The poor ranking under Individual Income Tax, which accounts for almost one-third of the total score, is especially concerning for those looking to support small business and entrepreneurship in the state. Although it may seem out-of-place in a survey of business tax measures, the individual income tax score is actually an important reflection of how business-friendly the state can be. A number of businesses, including sole proprietorships, S corporations, and partnerships, report their business income via the individual income tax code. In addition, individual income tax also affects the cost of labor and has been demonstrated to shrink the labor pool as people flee to other states with more friendly taxes. One of the best indications of the importance of individual income tax to the overall business climate can be seen in North Carolina, where significant reform of the individual income tax code contributed to the state's jump from 44th in the rankings in 2013 to 16th in this year's report.
"This year's State Tax Ranking reflects the lack of progress in improving the economy by Hawaii's policy makers," stated Keli'i Akina, Ph.D., President of the Grassroot Institute of Hawaii. "While the state maintains high tax rates to support its budget and excessive spending, policies toward small business discourage entrepreneurship, and contribute to the high cost of living and the brain drain. More is at stake here than simply helping businesses. By pursuing tax reforms that foster a healthy business climate, the state will ultimately help all residents of Hawaii with a more reasonable cost of living, lower individual taxes, and lower unemployment rates."
The report can be viewed in its entirety at: http://taxfoundation.org/sites/taxfoundation.org/files/docs/TaxFoundation_2015_SBTCI.pdf.