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Is Georgia the most tax-friendly state?

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Georgia ranks in the top 10 overall among the 50 states when it comes to favorable corporate taxes, but when all other major taxes affecting businesses are considered, the state isn’t the most tax-friendly, according to a new study of tax rates.

The 2014 State Business Tax Climate Index from the Washington-based Tax Foundation attempts to gauge a state’s ability to enhance or harm the competitiveness of its business environment. The conservative-leaning group collects data and publishes research studies on tax policies at the federal and state level.

Other groups, however, say taxes aren’t the most important factor in a business’s decision to relocate or expand operations. A national survey of small businesses earlier this year found nearly 60 percent said state licensing requirements, the availability of networking opportunities and access to a trained workforce are more important than taxes.

A functioning transportation system, availability of water and the quality of education are also more important factors than taxes, according to the left-leaning policy group Georgia Budget and Policy Institute, citing a study by the state’s Special Council on Tax Reform and Fairness.

The Tax Foundation said it looked at five areas: corporate taxes, personal income taxes, sales taxes, unemployment insurance taxes and property taxes.

Georgia ranks 32nd overall, up from 35th in the last report. The state ranks eighth in favorable corporate taxes, but 41st in personal income taxes. The state ranks 12th in sales taxes, 24th in unemployment insurance taxes and 31st in property taxes.

States at the top of the list have eliminated one or more of the tax categories. While each state has property and unemployment insurance taxes, for example, No. 1 Wyoming, No. 2 South Dakota and No. 3 Nevada have no corporate or personal income taxes. No. 4 Alaska has no personal income or state sales taxes, and No. 5 Florida has no personal income taxes.

Georgia fares better when compared with states that have comparable taxes:

  • Georgia’s state and local governments collect $862 per person in general sales taxes and $274 per person in excise taxes, for a combined $1,136, ranking it 11th lowest nationally. The state’s gasoline tax is 28.5 cents (20th highest nationally), while its cigarette tax is 37 cents (fourth lowest nationally).
  • Georgia’s state and local governments collected about $1,096 per person in property taxes, which ranks 18th lowest nationally.

Rounding out the top 10 most friendly states, in order, are Washington, Montana, New Hampshire, Utah and Indiana. The worst, in order, are New York, New Jersey, California, Minnesota, Rhode Island, Vermont, North Carolina, Wisconsin, Connecticut and Maryland.

In addition to Florida, two other neighbors ranked higher than Georgia overall — No. 15 Tennessee and No. 21 Alabama — and two ranked worse, No. 37 South Carolina and No. 44 North Carolina.

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