R.I. seventh-worst for tax competitiveness in U.S.

RHODE ISLAND RANKED 44th among states - or seventh worst - for its tax structure in the U.S., according to a report from the Tax Foundation. / COURTESY TAX FOUNDATION
RHODE ISLAND RANKED 44th among states - or seventh worst - for its tax structure in the U.S., according to a report from the Tax Foundation. / COURTESY TAX FOUNDATION

PROVIDENCE – Rhode Island’s No. 44 ranking on the 2017 State Business Tax Climate Index, released this week by the Tax Foundation, makes it one of the least competitive states when it comes to tax code structure.

Rhode Island performed poorly in most of the tax categories examined in the 13th annual report, which looks at how well states structure their tax systems by analyzing more than 100 tax variables in the following categories: corporate, individual income, sales, property and unemployment insurance.

Sales tax was the state’s highest ranking tax structure at No. 22, followed by corporate tax at No. 31, individual income tax at No. 39 and property tax at No. 44. Rhode Island was deemed to have the worst unemployment insurance tax structure in the nation.

While the majority of its tax categories rank among the bottom third in the country, Rhode Island has slightly improved its overall rank, moving to No. 44 from No. 45, its place for the last two years.

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New Hampshire at No. 7 is the highest ranked state in New England, followed by Massachusetts at No. 27. Although it is right behind Rhode Island with the second-worst unemployment insurance tax structure in the country, the Bay State had two tax structures ranked in the top 20, with individual income at No. 13 and sales at No. 18, respectively.

Connecticut performed marginally better than Rhode Island at No. 43. While most of its tax structures landed in the middle of the rankings, Connecticut suffers from the second-worst property tax structure in the nation.

The absence of a major tax helps to boost a state’s overall ranking and is a common factor among many of the top 10. Wyoming, which has the most competitive overall tax structure in the U.S., lacks both a corporate tax and an individual income tax. New Hampshire is one of three states without a sales tax.

New Jersey has the country’s worst overall tax structure. It is hurt by some of the highest property tax burdens in the U.S., maintains one of the worst-structured individual income taxes and is one of only two states to impose both an inheritance tax and an estate tax.
The Tax Foundation is an independent tax policy research organization.

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