Hawaii Makes the Bottom Ten.

Talking Tax, Jan 27, 2022

Every year, the Tax Foundation (no relation to the Tax Foundation of Hawaii) puts out research paper called the 2022 State Business Tax Climate Index. For years, Hawaii has been around the 20s and 30s among the states, but this year Hawaii has broken into the Bottom Ten, finishing at 41st. We are joined by a Senior Research Analyst from the Tax Foundation to see how we got there.

The host for this show is Jay Fidell. The guests are Tom Yamachika and Katherine Loughead.

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2022 State Business Tax Climate Index--Hawaii Ranks 41st

Tax Foundation, December 16, 2021

Executive Summary

The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement.

The 10 best states in this year’s Index are:

Wyoming
South Dakota
Alaska
Florida
Montana
New Hampshire
Nevada
Tennessee
Indiana
Utah

The absence of a major tax is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida and Tennessee have no individual income tax; and New Hampshire and Montana have no sales tax.

This does not mean, however, that a state cannot rank in the top 10 while still levying all the major taxes. Indiana and Utah, for example, levy all of the major tax types, but do so with low rates on broad bases.

The 10 lowest-ranked, or worst, states in this year’s Index are:

Hawaii
Louisiana
Vermont
Arkansas
Minnesota
Maryland
Connecticut
California
New York
New Jersey

The states in the bottom 10 tend to have a number of afflictions in common: complex, nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered by some of the highest property tax burdens in the country, has the highest corporate income taxes and among the highest individual income taxes in the country, has a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.

read … Full Report

PDF: Hawaii Business Tax Climate Index Report