(CONCORD) New Hampshire’s tax climate is pretty good for business, despite having the harshest corporate tax burden in the country, according to a new study released today by the Tax Foundation. The Washington based think tank annually ranks each state’s tax policies.
The Tax Foundation examines how each state’s tax policies compare in five areas; corporate, income, sales, unemployment, and property taxes. New Hampshire has ranked 7th best for overall business tax climate since 2007. In 2006, the Granite State was 6th. South Dakota retained the top ranking nationally, having passed Wyoming last year. New York and California are the least competitive states for business, according to the study. After four years on the bottom, New Jersey moved up two spots this year, now boasting the 48th best business climate in the nation.
New Hampshire’s economic competitiveness was dragged down in the rankings by its worst in the nation corporate tax policy. Author Kail Padgitt tells New Hampshire Watchdog that business competitiveness is harmed by having both a corporate income tax, the Business Profits Tax, and a form of gross receipts tax, the Business Enterprise Tax. While the BET is at a low rate, Padgitt says businesses have to pay it on every dollar they spend, whether or not they’re making money.
“It’s going after businesses that might not earn a profit that year. And even though they can deduct it from the BPT, it adds to the complexity in that businesses are filing two tax returns each year.”
Padgitt also notes that New Hampshire is one of only two states that limits the net operating losses that a business can carry forward as a tax deductions.