Kentucky has made significant strides in making the state more business-friendly, according to statistics included in the 2010 State Business Tax Climate Index, published by The Tax Foundation. The Tax Foundation is a nonpartisan nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
Released annually, the Business Tax Climate Index measures the competitiveness of the 50 states’ tax systems and ranks them accordingly based on the taxes that matter most to businesses and business investment: corporate income, individual income, sales, property and unemployment insurance taxes. The states are scored on these taxes, and the scores are weighted based on the relative importance or impact of the tax to a business. The Index measures how well a state’s tax system encourages investment by maintaining a broad tax base and low rates.
According to the recently released 2010 report, Kentucky’s ranking improved the most of any of the 50 states, moving up 14 spots from 34th in 2009 to 20th in 2010. The report noted attributed Kentucky’s leap in the ranking to the fact that many economically damaging changes were enacted in other states that previously ranked better than Kentucky – especially in the personal income tax – so other states’ rankings fell while Kentucky remained stable.
The top 10 states in the 2010 Index are South Dakota, Wyoming, Alaska, Nevada, Florida, Montana, New Hampshire, Delaware, Washington and Utah. The bottom 10 states are Vermont, Wisconsin, Minnesota, Rhode Island, Maryland, Iowa, Ohio, California, New York and New Jersey.