West Virginia ranked in the middle of the pack in a new report evaluating each state's business climate.
The Tax Foundation recently released its annual State Business Tax Climate Index for 2012, and West Virginia was ranked No. 23 overall. In 2011, the Mountain State was ranked No. 24.
The index ranked states based on their corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes.
Gov. Earl Ray Tomblin said the state's improved ranking on the Tax Foundation's annual index is proof that the state is heading in the right direction.
"West Virginia continues to decrease taxes with specific reductions including the phase-out of the business franchise tax, the phase-down of the corporate net income tax and the on-schedule elimination of the food tax. These are just some of the several steps that have been taken over the past several years to improve our tax structure for our citizens and our businesses," Tomblin said. "Along with continued job growth and a stable economy, the improved ranking by the Tax Foundation is another positive recognition that our efforts are well received."
Specifically, West Virginia ranked No. 24 for corporate taxes, No. 22 for income taxes, No. 18 for sales taxes, No. 26 for unemployment insurance taxes and No. 25 for property taxes.
"Even in our global economy, a state's stiffest and most direct competition often comes from other states," said Tax Foundation economist Mark Robyn in the report. "State lawmakers need to be aware of how their states' business climates match up to their immediate neighbors and to other states in their region."
When compared to neighboring states, West Virginia was right in the middle. Virginia, which is typically lauded as being a very business friendly state, was ranked at No. 26, while Ohio came in at No. 39. Maryland was ranked at No. 42. Pennsylvania and Kentucky scored slightly better than the Mountain State, coming in at No. 19 and No. 22, respectively.
The 10 best states in this year's index are Wyoming (No. 1), South Dakota (No. 2), Nevada (No. 3), Alaska (No. 4), Florida (No. 5), New Hampshire (No. 6), Washington (No. 7), Montana (No. 8), Texas (No. 9) and Utah (No. 10). According to the Tax Foundation, many of the top 10 states do not have one or more of the major taxes, and thus do not have the associated complexity and distortions.
The 10 lowest ranked, or worst, states in the 2012 Index are Iowa (No. 41), Maryland (No. 42), Wisconsin (No. 43), North Carolina (No. 44), Minnesota (No. 45), Rhode Island (No. 46), Vermont (No. 47), California (No. 48), New York (No. 49) and New Jersey (No. 50).
"While New Jersey remained steady compared with 2011, Rhode Island improved by implementing a modest income tax reform," according to the Tax Foundation's report. "The states in the bottom 10 generally have complex, non-neutral taxes with comparatively high rates."
The Tax Foundation said Illinois moved most dramatically in its Index rank over the past year, falling twelve places after a significant income and corporate tax increase. Other states seeing a decline in their ranking include Vermont, which fell four places, while Massachusetts and North Dakota both advanced four places up the chart.
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