Tannenwald’s first column discusses the Tax Foundation’s State Business Tax Climate Index (SBTCI) rankings, which compare each state’s business tax system. Tannenwald notes the relationship between the SBTCI and Louisiana Gov. Bobby Jindal’s tax reform agenda. He also highlights flaws of the SBTCI and suggests ways to improve it.
“For many years, policymakers and pundits have considered the SBTCI to be the method of choice for evaluating the competitive standing of state tax systems,” Tannenwald writes. “The director of practically every state development office awaits the annual release of SBTCI rankings with the same bated breath that college and university officials await the release of the U.S. News and World Report’s college rankings.”
“Despite the SBTCI’s influence, some elements of its method trouble me,” Tannenwald continues. “Especially disconcerting is the high weight it places on the personal income tax. The property tax should be weighted more heavily because it is by far the largest tax that businesses pay. Furthermore, SBTCI’s policy implications seem to clash with those of the foundation’s other published indicators of state business tax competitiveness.”
Robert Tannenwald is an adjunct lecturer in public policy and budgeting at the Heller School of Brandeis University. He spent 28 years as an economist with the Federal Reserve Bank of Boston, from which he retired as vice president in 2010. He was the founding director of the bank's New England Policy Center. He has also served as senior fellow at the Center on Budget and Policy Priorities and as an analyst in taxation at the Congressional Research Service.
State Tax Notes, a Tax Analysts publication, is a weekly magazine dedicated to current state and local taxation issues. Read Tannenwald’s first Economist's Roost column, “Concerns About the Tax Foundation's State Business Tax Climate Index.”
For more information or to set up an interview with Tannenwald, please contact Shaima Cardillo at 703-531-4852 or firstname.lastname@example.org.
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