Connecticut ranks #41 in its policy environment for small businesses and entrepreneurship, according to a study that ranked the 50 states in a Small Business Policy Index. Most of the New England states landed towards the bottom of the list, with none ranking in the top 25. The report, Small Business Policy Index 2014: Ranking the States on Policy Measures and Costs Impacting Small Business and Entrepreneurship, tracks 42 measures with 33 of them pertaining to taxes and regulations. Issued by the Small Business & Entrepreneurship Council, the index ranks the 50 states according to 42 different policy measures, including a wide array of tax, regulatory and government spending measurements. The index, which has been published annually for 19 years, continues to point to South Dakota as the most entrepreneurial-friendly state in the U.S., benefiting most from the lack of individual income tax, capital gains tax, corporate income tax and inheritance tax.
The top 10 states are South Dakota, Nevada, Texas, Wyoming, Florida, Washington, Alabama, Indiana, Colorado and North Dakota. Among the New England states, the highest ranked was New Hampshire at #27, followed by Massachusetts at #31, Rhode Island at #40, Connecticut at #41, Maine at #42 and Vermont at #45.
Commenting on Connecticut, the report indicates that “Connecticut’s entrepreneurs, businesses, investors and workers benefit from a low crime rate and low consumption-based taxes. However, the state’s negatives are numerous, including high personal income, individual capital gains, corporate income, corporate capital gains, property, gas and diesel taxes, along with high levels of government spending and debt.”
Connecticut’s ranking was unchanged from last year’s Index report. In 2012 the state ranked #42 and in 2011 was ranked at #44. In 2010, Connecticut ranked at #41, which was a drop from #40 in 2009.
“States like Arizona, Indiana, Kansas, New Mexico, North Carolina, North Dakota, and Ohio have really stepped up their game on the policy front. In each of these cases, tax reform and relief were undertaken, which reduces the costs of risk taking and doing business. Meanwhile, top-tier policy states like Texas, Nevada, South Dakota, Florida and Wyoming continue to leverage their long-standing policy advantage, and are doing things to get better,” said SBE Council President and CEO Karen Kerrigan.
Of the 42 measures included in the recently issued 2014 edition of the Index, 24 are taxes or tax related, 9 relate to regulations, five deal with government spending and debt issues, with the rest gauging the effectiveness of various important government undertakings, according to the report. The lowest ranked states were New York, New Jersey and California.
The report states that “most business owners understand the array of costs and burdens imposed by government. Taxes and regulations, for example, drain enterprises of vital resources, distort decision-making, and redirect resources and energies away from maintaining, improving and/or expanding a business.”
In the individual measures, among Connecticut’s highest rankings were #7 in crime rate, #10 “State and Local Sales, Gross Receipts and Excise Taxes as a Share of Personal Income,” #13 in the rankings of “Adjusted Unemployment Taxes,” and #17 in workers compensation costs.
The Small Business and Entrepreneurship Council (SBE Council) is a 501c(4) advocacy, research, education and networking organization dedicated to protecting small business and promoting entrepreneurship. SBE Council works to educate elected officials, policymakers, business leaders and the public about key policies that enable business start-up and growth. The report, issued in December, was authored by Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council.