Kentucky ranks 34th in business taxes

Stateline.orgMay 16, 2013 

  • STATE BUSINESS TAXES

    The study found that the average of all states, as a percentage of operating margin, is 10.2 percent.

    LOWEST TAX STATES

    Delaware: 5.1 percent

    Oregon: 5.7 percent

    Utah: 6.2 percent

    Louisiana: 7.3 percent

    Georgia and South Dakota: 7.8 percent

    HIGHEST TAX STATES

    Alaska: 25.2 percent

    North Dakota: 16.8 percent

    Wyoming: 15.7 percent

    Vermont: 14.6 percent

    West Virginia: 14.2 percent

    SOURCE: Anderson Economic Group

Overall business taxes are lowest in Delaware and highest in Alaska, according to a study from the economic consulting firm Anderson Economic Group. But how much company pays depends on the kind of business it is. Businesses in Delaware paid 5.1 percent in state and local taxes in 2011, and those in Alaska paid 25.2 percent, the report said.

In the report's rankings, from the lowest taxes to the highest, Kentucky ranked in the lower middle, at No. 34, with businesses paying 11.1 percent.

The states were ranked according to the percentage of businesses' operating margin that states taxed. Operating margin is, broadly, profit before the business pays its interest on loans and taxes.

The report also showed that U.S. businesses paid more than $623 billion in state and local taxes in 2011, the latest year for which figures were available.

The largest percentage of taxes paid by businesses are property taxes, general sales taxes and unemployment insurance taxes, which accounted for 68 percent of the total state and local taxes paid by businesses in 2011, according to the report.

Alex Rosean, one of the authors of the study, said Delaware is particularly low in how much it taxes businesses because it has no corporate or individual income tax, a low property tax, and a low unemployment compensation tax.

"They also don't have a sales tax," Rosean noted, adding that the economy in Delaware has been doing better than many other states.

As for Alaska, Rosean said that state also has a low individual income tax and no sales tax. But it has a relatively high corporate income tax, and, he added: "They have an absolutely gigantic severance tax, a tax on mineral extraction. As soon as a barrel of oil leaves the ground, they tax it.

Alaska was losing out to drilling in other states including North Dakota, Pennsylvania and Texas, and just this year, decided to lower the taxes on oil companies in a bid to lure them back.


STATE BUSINESS TAXES

The study found that the average of all states, as a percentage of operating margin, is 10.2 percent.


LOWEST TAX STATES

Delaware: 5.1 percent

Oregon: 5.7 percent

Utah: 6.2 percent

Louisiana: 7.3 percent

Georgia and South Dakota: 7.8 percent


HIGHEST TAX STATES

Alaska: 25.2 percent

North Dakota: 16.8 percent

Wyoming: 15.7 percent

Vermont: 14.6 percent

West Virginia: 14.2 percent

SOURCE: Anderson Economic Group

Lexington Herald-Leader is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service