The Tax Foundation today released its FY 2011 State Business Tax Climate Index. North Carolina drops from 39th to 41st – placing it among the ten worst business tax climates in the nation. North Carolina rates the worst in the southeast, with the next-lowest ranking in the region being Tennessee at 27 (expanding the regional scope we see West Virginia at 37 and Louisiana at 36 – it can’t be a good sign when you’re ranked worse than West Virginia).
This stands in contrast to Forbes ranking NC number 3 for “best states for business” and Site Selection Magazine’s awarding NC its top slot for nation’s best business climate. The Governor’s office annually crows about these rankings. I doubt there will be any press releases discussing the Tax Foundation’s Index.
Moreover, the Small Business and Entrepreneurship Council places North Carolina 37th in their tax index for small businesses – also among the worst in the nation and worst in the southeast. This is another business ranking Perdue’s office won’t mention.
So how to settle the major discrepancies? Look at the results.
A major indicator of NC’s economic performance is the rate of private sector job creation. I recently examined private sector job growth among the 50 states dating back to 2000, and found that North Carolina rated 35th. Similarly, the Kauffman Foundation has created their “Index of Entrepreneurial Activity,” which measures new business formation across the nation. Kauffman’s report for 2009 ranked NC as being tied with Kentucky for the 12th worst new business startup rate in the nation.
Furthermore, recent employment figures show that North Carolina’s job market has suffered greater losses during the recession than most states.
Looks like the Tax Foundation and SBEC rankings are much more closely aligned with actual business performance and results than the Forbes and Site Selection lists.