We're No. 9: State climbs tax-climate index

Chamber of Commerce president says ranking shows Montana is a good place to do business

Montana is among the top 10 in the State Business Tax Climate Index, which was released Monday by the Tax Foundation, a tax research organization based in Washington, D.C.

"We're happy about it," said Webb Brown, president and chief executive officer of the Montana Chamber of Commerce. "It's good news in the respect that not only did we hit the top 10, but we jumped four points."

Montana went from No. 13 in 2004 to No. 9 this year.

Curtis Dubay, an economist with the Tax Foundation, says the purpose of the index is to discover how states collect taxes.

"We conduct the Small Business Tax Climate Index report because we feel that, aside from how much a state collects in taxes, how they collect taxes is important as well," he said.

The report ranks all 50 states in five categories, then tallies those to come up with a state's overall rank.

The five categories are major business taxes, individual income taxes, sales tax, unemployment insurance tax and asset taxes, the largest of which is property tax.

States in the top 10 go without one or more of those taxes, Dubay said. That Montana has no sales tax helped put it in the top 10.

That wasn't the only factor that moved the state up the list.

"It was because of the personal-income-tax reduction that moved Montana into the top 10," Dubay said.

Brown said the state chamber lobbied intensively for the rate reduction.

"That's part of the reason we pushed so hard … we felt that it would be better for business," he said. "It does make a big difference."

Montana went from 47th in that category to 21st.

Brown said, though, that reduced personal income tax helped Montana because the Tax Foundation weighted the category more heavily for this year's study. It counted for more than 25 percent of the total score.

The second-most important category, in which Montana ranked fifth, was sales tax.

In the corporate business tax index, the state fell from 15th to 17th. Change in the two other categories was "negligible," Brown said.

Montana is 24th in unemployment insurance tax and 23rd in asset taxes.

Although the report isn't the be-all, end-all indicator of a state's economic climate, it can show what is happening economically.

"States that score high on the tax climate index also experience economic growth," Dubay said.

Brown said the chamber will cite the report when encouraging businesses to move to Montana.

"All of these studies and surveys and rankings and things - we don't pin our hat on any one of them," he said. "But we're actually in pretty good shape. We are making progress."

Room for improvement still exists, however.

"If you count Alaska and Texas, seven of the top 10 are in the western United States," Brown said. "Our competitors score better than we do. Oregon's right in there. Our competition is still ahead of us."

Wyoming led the latest index, followed by South Dakota, Alaska, Florida, Nevada, New Hampshire, Texas and Delaware. Oregon rounded out the top 10.

New York, New Jersey, Rhode Island, Ohio and Vermont ranked lowest.

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com.