A Review: The SBE Council’s 2011 Business Tax Index

Three Takeaways

1. Although Washington, DC ranks last in the SBE Council’s index, the rankings do not correlate with entrepreneurial and small business growth. Compare Washington, DC (# 51) with California (#45) and South Dakota (#1).

2. According to the rankings, Virginia (#14) is far more favorable to entrepreneurs and small businesses than Maryland (31) and Washington, DC (# 51).

3. As a 501(c)4, the SBE Council is a self-proclaimed “lobbying and advocacy center” located in Oakton, Virginia.

Image from sbecouncil.org

A Review: The SBE Council’s 2011 Business Tax Index

Recently, the Small Business & Entrepreneurship Council released its Business Tax Index for 2011. Ranking the fifty states as well as the District of Colombia via eighteen factors, the index sorts states from best to worst in terms of the costs of their tax systems on entrepreneurship and small business.

There was a small amount of chatter throughout DC’s entrepreneurial circles alerting others to DC’s less than favorable positioning. However, without comparison to the other leading entrepreneurial states in the nation the data might lead you to believe that DC was an entrepreneurial wasteland.

It isn’t.

Don’t forget that 92% of all statistics are made up, can be skewed to favor an agenda, and that perspective is important.

As such, here are four notes to consider that might help you form your own informed opinion.

1. Boasting Silicon Valley, California should be first… but it isn’t. It’s 45th.

DC may have ranked last, but the other leading hotbeds of entrepreneurship in the country (namely California, Massachusetts and New York) didn’t fare much better. As such, it’s fair to say that although DC may not be the most favorable, the rankings aren’t indicative of the strength of the entrepreneurial environment.

At bottom, someone needs to answer the question why South Dakota (#1) isn’t booming. Clearly, ranking is not a sufficient indicator of environmental success.

2.The 15 best state tax systems are:

1) South Dakota, 2) Texas, 3) Nevada, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) Alaska, 9) Ohio, 10) Colorado, 11) South Carolina, 12) Mississippi, 13) Oklahoma, 14) Virginia, and 15) Missouri.

3. The 15 worst state tax systems are:

37) Illinois, 38) North Carolina, 39) Nebraska, 40) Connecticut, 41) Oregon, 42) Rhode Island, 43) Hawaii, 44) Vermont, 45) California, 46) Maine, 47) Iowa, 48) New York, 49) New Jersey, 50) Minnesota, and 51) District of Columbia.

4. Of the three states in the greater metropolitan area, Washington DC ranked worst overall.

Read the full SBE Council’s 17 page report here: http://www.sbecouncil.org/businesstaxindex2011/report.pdf

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Adam Zuckerman, an entrepreneurial attorney with an MBA, is a blogger and people connector inspired by the intersections of business, law, media, technology, and all things outdoors. Connect with him on Twitter.