INDIANAPOLIS | Indiana moved up two slots and now ranks as the 12th best business-tax climate in the United States, according to a new analysis by the Tax Foundation.
The nonpartisan tax analysis organization praised the Hoosier state for its low top individual income tax rate of 4.56 percent and for exempting most business-to-business purchases from sales taxes.
The state lost points for having one of the highest state-level sales tax rates at 7 percent. Only California has a higher state sales tax rate at 8.25 percent.
In some localities, such as Cook County, Ill., shoppers pay more than 10 percent sales tax, but that's due to local sales tax additions. Illinois' state sales tax rate is only 6.25 percent.
Indiana's business tax climate overall was ranked highest in the Midwest in the 2010 State Business Tax Climate Index.
Among neighboring states, Illinois ranked 30th, Michigan was 17th, Kentucky was 20th and Ohio was 47th.
Mitch Roob, Indiana's Secretary of Commerce, said Indiana's ranking shows that Gov. Mitch Daniels' focus on job creation and economic development is paying off.
"While other states are imposing tax increases to cover budget shortfalls, Indiana's solid fiscal house and competitive tax environment have earned us national attention as a front-runner for new jobs and investment," Roob said.
The report actually singled out Indiana for special attention, suggesting that while state lawmakers should be concerned about global competitiveness, "they need to be more concerned with companies moving from Ithaca, N.Y., to Indianapolis than from Ithaca to India."
The full report can be read online at: taxfoundation.org/files/bp59.pdf
Top 12 states for good business-tax climate
1. South Dakota
2. Wyoming
3. Alaska
4. Nevada
5. Florida
6. Montana
7. New Hampshire
8. Delaware
9. Washington
10. Utah
11. Texas
12. Indiana
Midwestern state rankings
12. Indiana
16. Missouri
17. Michigan
20. Kentucky
30. Illinois
42. Wisconsin
43. Minnesota
46. Iowa
47. Ohio
Source: Tax Foundation's 2010 State Business Tax Climate Index
