The Tax Foundation has released the 2007 edition of its guide comparing the business tax climate between states.

The latest edition of the State Business Tax Climate Index focuses on the dangers of using tax incentives as economic development tools. The report takes the viewpoint that tax incentives -- whether in the form of targeted tax incentives to specific companies, or special credits or exemptions -- make for bad tax policy.

The index is designed to measure the competitiveness of each state’s tax system. The report prefers state tax systems that levy low, flat rates on the broadest bases possible, and treat all taxpayers the same and penalizes variation in the tax treatment of different industries. The index favors states that apply those principles in five important areas of taxation: individual income taxes, major business taxes, sales taxes, unemployment insurance taxes, and taxes on wealth or assets, such as property.

Topping the 2007 index are: Wyoming, South Dakota, Alaska, Nevada, Florida, Texas, New Hampshire, Montana, Delaware and Oregon. The bottom 10 states are Rhode Island, Ohio, New Jersey, New York, Vermont, California, Nebraska, Iowa, Maine and Minnesota.

The full report is available at

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