Report: Bay State Bad For Business

Massachusetts' state tax system is one of the very worst in the nation for small businesses and entrepreneurs.

Massachusetts ranked 42nd on the list of "worst state tax systems" compiled by the Virginia-based Small Business & Entrepreneurship Council.

Labeled along with Massachusetts' as "worst tax systems" were those used in Hawaii, North Carolina, West Virginia, Nebraska, Idaho, Vermont, Rhode Island, Iowa, New York, California, Maine, Minnesota, New Jersey, and worst of all, Washington, D.C.

According to the council, many state governments "don't seem to grasp the burdens they impose on the private sector," particularly small business owners.

The council took 16 tax measures from personal income taxes to gas taxes into account while tabulating its index.

The council's 15 best state tax systems for small businesses belong to: Oklahoma, Missouri, Tennessee, Mississippi, South Carolina, Ohio, Alabama, Colorado, Alaska, Florida, Texas, Washington, Wyoming, Nevada, and best of all, South Dakota.

Many of the top states levy little or no personal or corporate income taxes or capital gains taxes. Instead, states like South Dakota, Ohio, Alaska and Wyoming rely heavily on state and local property, sales and excise taxes.

Tax rates and taxes paid as a share of personal income were high in Massachusetts in every category except sales taxes, the council said.