Maine’s business tax system is one of the worst in the country but is making gains, according to a report released Monday by the Small Business and Entrepreneurship Council.
Maine was 46th overall for the second year in a row in a ranking of the 50 states and the District of Columbia, which ranked the worst at No. 51, followed by Minnesota, New Jersey, New York and Iowa. South Dakota, Texas and Nevada topped the list as the best states for business.
The study is the latest in a string of reports that list Maine’s business climate as one of the worst in the country which often are cited by conservatives in the state as a reason to lower Maine’s taxes.
The 18 tax measures used to compile the study included: corporate and personal income, capital gains, property, sales, gas and diesel, unemployment, and wireless services.
Maine’s top personal income and capital gains tax rate of 8.5 percent and corporate income and capital gains tax rate of 8.93 percent put the state in the bottom 10 when compared with other states. The report noted that Maine has high property taxes as a share of personal income. The state also received unfavorable rankings for its taxes on gas and diesel.
But the state received more favorable rankings when the report looked at sales and excise taxes as a share of personal income, where Maine was tied for 17th; unemployment taxes, where Maine ranked 26th; and taxes on wireless services, where Maine ranked 11th.
The report also mentioned Maine as one of nine states that has taken steps to provide tax relief. Speaking by phone Tuesday, Raymond J. Keating, chief economist for the Small Business and Entrepreneurship Council and author of the report, said a decrease in Maine’s top income tax rate that takes effect in January and a push by Gov. Paul LePage to lower it even further are good signs for Maine’s business climate.
Keating said that taxes aren’t necessarily the sole deciding factor when deciding where to locate a business. Commerce centers California and New York ranked near the bottom of the list, while South Dakota — not exactly known as the entrepreneurship capital of the country — took the No. 1 spot.
“There are a whole bunch of factors that come into play, not just taxes,” Keating said. One of those factors is market opportunity, but “similar or even better market opportunities might lie elsewhere in the nation” in states with lower tax burdens.
“From a policy standpoint, when you consider that small- and medium-sized firms create about two-thirds of net new jobs, why would you want to tax them more heavily?” Keating said.
Not every economic study lists Maine as bad for business. A report released in 2011 by the Council on State Taxation listed the Pine Tree State as the No. 1 friendliest state for taxes on new business investment. But Keating said that report ignored Maine’s high capital gains taxes and took a narrow look at what types of investments are considered.
Keating’s assessment of the tax burden is more broad-based. He encouraged states to avoid allowing politicians to try to read the tea leaves and give tax breaks to individual businesses and instead lower taxes across the board and let the market decide.
Interesting that two of the states with worse rankings than Maine, New York and New Jersey, are both in the top 7 when ranked by GDP. Meaning they have large, flourishing economies, despite having a poorer rating when it comes to business taxes. Our tax burden may be high, but it appears that there is a lot more involved then simply tax rates when it comes to a places appeal to business.
It probably helps to have a market.
Canada has “worse” taxes than Maine, and its economy is thriving, everyone can afford a doctor (zero bill from a visit), and they are happier and healthier than us, according to Forbes Magazine.
I know plenty of people who would start their own business–except for health insurance.
http://www.forbes.com/2011/01/19/norway-denmark-finland-business-washington-world-happiest-countries_print.html
Perhaps if you had lived in Canada and experienced the medical services you could comment with some authority on it. Having lived there I didn’t like it or respect it. The folks you know who would start their own business are always the dreamers with a convenient excuse. The ones with the ideas and grit to do it, don’t make excuses.
I lived there, my friends and some family live there, and Forbes Magazine is on our side. I’m sick of seeing my neighbors die from treatable diseases because they don’t want to sell their house to pay for medical bills–the house they worked all their lives to pay for.
I have friends and family that live in Canada also….yet they come to U.S. for care. They’re thankful to have the opportunity to pay for it, unlike many others who can’t. I also find it interesting how Canadians love to shop in U.S…..wonder why?
US citizens used to drive by the bus load to Canada to buy their medications, because Big Pharma was ramping up the cost in the US–but then Big Pharma bribed Congress, and US citizens could no longer drive to Canada to buy medications, they had to suffer, thanks to greed.
Oh, Canadians love to shop here because their economy is doing great, and Wall Street destroyed our economy driving down the dollar in relation to the Canadian currency.
The Canadian government Subsidize the pharmaceutical companies in Canada . Their healthcare doesn’t cover Meds. Thats why they are so cheap.
Polls have continually noted canandians are happier with their health sys, live longer and have a less expensive sys. But you sure can get a good lipo-suction quick in the us if have the bucks.
here’s the first study I came across..
http://www.mcclatchydc.com/2009/07/21/72229/poll-canadians-like-their-health.html
Interesting, considering the fact that three times more people per capita go outside the US for medical care than those who come here.
If Canada had the best medical care on earth free of charge I’d still not want to live in the 51st state. People wait years up there for joint replacements etc. and when they are at the end of their pain ropes they come down here for treatment.
They also have the QUEEN on there money. America is not Canada or any other country we where founded on the rights of the people. I am very happy right here in my slice of heaven right here in Maine. I would trade what I have here for what they have for anything in the world.
You do realize that Canada does not acually have QUEEN, right? They have an elected president and everything. Also, the dude on the American 20 Dollar bill was kind of a bastard. Maybe who is on the money is not the best way to judge…..
I’m kind of a bastard myself, although I do try to control it.
Canada has a Prime Minister and Parliament similar to the Uk, and still recognize the Queen (and everything). I’d LOVE to hear why you think Andrew Jackson was kind of a bastard, especially when compared with the other Presidents and the Monarchy in UK/Canadian history.
Maine Gun Guy only said that Canada isn’t the USA.
You mean other than the Indan Removal act and the Trail of Tears?
He was a product of the times. Most of the Country had the same mindset.
We had slavery to. We learned and moved on.
That changes the fact they have a queen on there money how? We in America are not fans of rulers like that ( even if they are in name only as the royals in the uk are now ) we are a free people and the thought of putting a king/ queen on our money woudl never fly. As for the presidents on our money they are chosen. Just because you did not like one does not make them bad it makes you an American who is free to say I don’t like him.
Translation:
As long as I have everything I want, people can die right and left from lack of affordable healthcare. Who cares about them, anyway?
And if Canada took the Queen off their money what would it change?
Canada would still have “worse” taxes than Maine, and its economy would still be thriving, and everyone could still afford a doctor.America excels at starting wars especially when oil is involved while it’s own people die from lack of health care.
You’re drinking way to much Kool-Aid.
What do you drink at those Maine Heritage Policy Center meetings?
Open for business lmao.
Is anyone on the left reading this left to “right”?
What if taxes were not the most important thing in the world? What if we’d be 6 then? Oh, probably not.
We needed a study for this? Any person who owns or has owned a business in Maine can tell your this.
Thats not good, 5th worse….,,,, but it appears Mr. Lepage is trying to change that from what I see in the papers.
Any study that puts Nevada as one of the best places to do business is seriously flawed. New York, New Jersey or Minnesota have much more diverce, functioning economies than Nevada.
I believe the undertaking business ought to be good because folk go there for suicide…. a better destination than Jamaica…….
Here come the crocadile tears, and the starvation wages. It’s a terrible thing to have to pay taxes, it’s alright for the help but “job creators” are special.
Ironic part is that the 1% ers hardly ever create any jobs at all. Time to tax these TAX CHEATS and Romney too. Funny how Romney refuses to release the last 10 years of his income taxes when most of his money was in Swiss and Cayman Island Bank Accounts avoiding paying income taxes.
Why do some people think taxes are the only thing that creates jobs ever. Don’t wealthier southern maine towns pay the same business taxes as poor northern maine towns. If you cut taxes then you cut roads and school funding. I wonder how southern maine would do without roads or schools. Im not saying we should have high taxes and maybe if we dont bomb countries that are not a threat to us they wouldn’t have to be so high. How about we have simplified consistent moderate taxes instead of lowering and raising them all the time.
your so correct but the tax crap here is very cumborsome. we have to inventory everything in the building and pay taxs on it every year… but in the same token. lets take bandwidth(internet bandwidth) the business i work for moved all there bandwidth intensive applications out of maine… why because outside maine they are able to get double the bandwidth that they can here for less than 20% of the cost. electricity is insane in this state which was another factor. we are losing jobs and money to other states from established businesses. I will back any government offical doing what needs to be done to help maine get moving. cutting peoples workers comp is not going to help.
The state of Maine allows some businesses to collect state taxes from their employees…and then allows the businesses to keep that money instead of paying it in to the state . List of states & companies, along with the info at the link below. BIW was listed in the article, for $60 mil. in state taxes that they with held from employees that was never paid into the state because BIW was allowed to keep that money. There’s more to it than just that, the article is worth the read, imho.
http://blogs.reuters.com/david-cay-johnston/2012/04/12/taxed-by-the-boss/
Nothing new here, in LePage’s run Maine.