As well as its year-round sunshine, theme parks and long beaches, Florida is famous for its favourable business climate. In this year’s ranking, the Sunshine State rises from fifth to fourth position to become one of the top five best proving that the Florida Business Climate stands out among the rest.
The annual State Business Tax Climate Index examines all 50 of the US states to find which offer the best tax system for business. The Index looks at a total of 100 differentials, although only five specific taxes appear in the ranking table: corporation tax, individual income tax, sales tax, unemployment insurance tax and property tax.
The top five states in the 2016 Index are Wyoming, South Dakota, Alaska, Florida and Nevada. Both Wyoming and South Dakota repeated their 2015 positions while Alaska and Florida climbed up a notch in the rankings and Nevada fell by two.
At the opposite end of the table, the US states with the worst business climates were Vermont, Minnesota, California, New York and New Jersey. All five showed no improvement on their 2015 rankings.
Florida Tax Rankings
The Index highlights the fact that the states in the top five positions share one common denominator – the absence of one major tax. The factor alone automatically catapults a state to a much higher ranking.
The Florida Business Climate stands out in two of the five tax ratings: individual income tax and unemployment insurance tax. In terms of how much individuals pay in taxes, Florida is one of the few states with zero income tax, a big incentive for people considering a move to the state.
Corporate tax in Florida is levied at a flat rate of 5 per cent, low compared to many European companies, but this is not the case within the US. Some states levy zero corporation tax, a fact that accounts for Florida’s 17th place in this particular tax area. South Dakota is a stand-out state for corporation tax and occupies the top position in the table.
Tax Important for Business
The Index points out that taxes are hugely important for business and a major consideration when it comes to setting up a new business or relocating an existing one. “Taxes matter to businesses,” says the Executive Report. It goes on to add that the states that rank highly in tax climates will “be the most competitive at attracting new businesses”.
By extension, those states whose favourable tax climate attracts new business will also be successful in boosting their economy and creating new jobs. This is certainly the case in Florida where state economy and employment are growing at considerably higher rates than the national.
Florida Economy & Employment Boom
The Florida & Metro Forecast 2015-2018, published by the Institute for Economic Competiveness in September, announced that Florida is on track for 3.3 per cent GDP growth this year. The World Bank predicts 2.7 per cent for the US as a whole. A similar pattern is expected next year with Florida’s GDP growth forecast at 3.1 per cent and the US at 2.6 per cent.
Job creation is experiencing much the same scenario. Unemployment in Florida in October fell to 5.1 per cent, its lowest rate for seven years. The figure sits very slightly higher than the national rate (5 per cent in October), but Florida stands out in its job creation rate. The Institute for Economic Competitiveness expects it to average 2 per cent between 2015 and 2018, 0.7 per cent more than the predicted national rate.
More Business Accolades
The fourth position for the Florida business climate is the latest in a series of national accolades for the state. Earlier this year, the Fiscal Times placed Florida in fifth position in the countrywide ranking for lowest tax burdens. For their part, Chief Executive ranked Florida as the second best state to do business.
Source: Tax Foundation