Florida Tops the List of Business-Friendly Tax States

Florida’s tax climate is much more welcoming than those of neighboring states, Alabama and Georgia.

The Tax Foundation recently released its “State Business Tax Climate Index,” and the Sunshine State outshined its neighbors. Ranking fifth in the U.S. for its overall tax system, Florida fared well in each of 5 major areas of state taxation.

     Florida       Alabama      Georgia

Overall Rank                                                                    5                28                36

Corporate Tax Rank                                                      14                 27                 8

Individual Income Tax Rank                                          1                 23                42

Unemployment Insurance Tax Rank                            3                  25               36

Sales Tax Rank                                                               12                41                17

Property Tax Rank                                                         16                10                30

 

Taxes Matter to Businesses . . .

Business taxes affect business decisions. And one of those decisions is where to open up their doors. Each state has its own various (and sometimes complex) taxes with which its businesses must comply. Corporate taxes, unemployment insurance taxes and sales taxes are at the forefront of any business owner’s consideration to open, move or expand the business.  Taxes ultimately diminish profits. And in states where those tax amounts are more substantial, there is a higher likelihood that the difference will be passed along down the line – to consumers through higher prices, to employees through lower wages or fewer jobs, or to shareholders through lower share value or dividends.

        Florida            Alabama            Georgia

Corporate Income Tax                                 5.5 %               6.5 %                 6.0 %

Individual Income Tax                                 0 %             2.0 – 5.0 %        1.0 – 6.0 %

Unemployment Insurance Tax                  2.7 %          2.25 – 8.4 %        0.2 – 5.4 %

Sales Tax                                                      6.0 %         4.0 – 12.0 %         4.0 – 8.0 %

Property Tax (Millage Rates)                       0                      6.5                        0.5  

 

. . . and to Employees

Business taxes matter to employees as well – especially when they come out of the employees’ paychecks! Most directly, employees are impacted by a state’s individual income tax (or lack thereof) and its unemployment insurance tax(es). However, the state’s overall tax climate affects individuals’ lives “close to home.” Using neighbor bordering states as an example, consider the following … 

A person whose job is located near the border of a neighboring state will likely factor the neighboring state’s lower property taxes in the decision of where to live. The neighboring state’s absence of an individual income tax would likely be an even more influential factor in that decision. And no doubt that person will make the drive to a nearby neighboring state with lower sales tax rates to make major purchases. See below for a comparison between Escambia (and Santa Rosa) counties in Florida, and neighboring Baldwin County, Alabama. 

Escambia County, Florida Tax Rates          Sales Tax:   7. 5 %          Millage Rate:   14 – 20.6

Santa Rosa County, Florida Tax Rates          Sales Tax:   6. 5 %          Millage Rate:   13 – 17

Baldwin County, Alabama Tax Rates          Sales Tax:   9. 5 %          Millage Rate:   28 – 42. 5

 

The Tax Foundation compiles its “State Business Tax Climate Index” by comparing over 100 different variables in 5 major areas of state taxation:

  1. Corporate Taxes
  2. Individual Income Taxes
  3. Sales Taxes
  4. Unemployment Insurance Taxes
  5. Property Taxes

This approach to compilation provides for a balancing of each state’s strong aspects and weak aspects of its tax system, ultimately resulting in a measurable factor of how each state’s overall tax system fares in competition to the rest of the country. 

*For a complete listing of all 50 states, see [url href=”http://taxfoundation.org/article/2015-state-business-tax-climate-index” title=”The Tax Foundation’s State Business Tax Climate Index 2015″ ]The Tax Foundation’s State Business Tax Climate Index 2015[/url] at taxfoundation.org.

By Misty Priest

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