Sunday, December 2, 2012

The best and worst state tax systems for small business

If you are thinking of launching a small business, state taxes might influence its location, for better or for worse. Here's the ranking.

3 comments:

  1. If state income taxes are deductible from federal returns, why would they have much of an effect on a business?

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  2. Uh, because they are a deduction, not a credit. So one in effect gets a reduction in federal tax equal to the federal rate applied to the nominal state tax amount. For this year, at least, if I pay $1000 in state taxes, I get a reduction in federal tax of $350 (simplifying, but basically), but I still send Trenton $650 I would not have to spend if my tax domicile were in, say, Texas.

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