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Hawaii fell one position in a 2016 national ranking of tax impacts on businesses but remains well above the bottom spot that it once held, according to an annual ranking by a Washington, D.C.-based group.
The Tax Foundation, a nonpartisan nonprofit led largely by executives of major corporations, ranked Hawaii No. 31 among 50 states based on five tax areas that the organization said are indicators of which states’ tax systems are most hospitable to business and economic growth.
Hawaii’s rank was down one spot from its 2015 ranking. The slip was due to Illinois leapfrogging Hawaii in the rankings because tax increases that Illinois imposed in 2011 expired. Being in the bottom half of states isn’t something to necessarily boast about, but Hawaii has previously occupied the worst spot on the Tax Foundation’s list, as was the case in 2004.
This year New Jersey was ranked as the state with the worst business tax climate. The foundation said in its report that New Jersey has one of the country’s highest property tax burdens, one of the country’s worst-structured individual income taxes and is one of only two states with inheritance and estate taxes.
The state with the best ranking this year is Wyoming, which has no corporate or individual income tax.
The foundation’s rankings are based on five different tax areas — individual income, sales/excise, corporate, property and unemployment insurance — and assigns different weights for each area, with the highest to lowest weight in the order listed.
Hawaii’s best score among the five tax areas was for corporate taxes, with a rank of 10. The state’s worst score was for individual income taxes, with a rank of 37.
