Colorado ranks 16th among the 50 states in the latest results of an annual analysis of how taxes affect businesses.
Colorado held its spot in the State Business Tax Climate Index for 2017 on the strength of its property and income tax structures and overall tax climate.
The Tax Foundation — a nonprofit, nonpartisan tax research organization based in Washington, D.C. — compiles the index to compare state tax systems and how well states structure those systems.
The index takes into account a total of more than 100 variables in five major areas of taxation: corporate and individual income taxes, property tax, sales tax and unemployment insurance tax. Those variables are used to calculate overall scores for states and, in turn, rankings. The index also identifies state tax trends, including efforts to simply tax systems by consolidating individual income tax brackets or moving to flat taxes.
“While there are many ways to show how much a state collects in taxes, the index is designed to show how well states structure their tax systems and to provide a roadmap for improvement,” said Jared Walczak, a policy analyst with the Tax Foundation.
Colorado scored a 5.38 in the 2017 index to remain 16th. Colorado ranked 18th in the 2015 and 2014 indexes.
For 2017, Colorado ranked highest at 14th for property taxes, but also fared comparatively well at 16th for corporate and individual income taxes as well as overall tax climate. Colorado ranked lower at 39th for sales tax and 42nd for unemployment insurance.
Wyoming remained the top-ranked state in the 2016 index, while South Dakota maintained its second-place ranking. Alaska and Florida continued to rank third and fourth, respectively. Nevada held on to its fifth-place spot.
Wyoming, South Dakota and Nevada impose no corporate or individual income taxes. Alaska levies no individual income or state-level sales taxes. Florida imposes no individual income tax.
Minnesota and Vermont switched places at the bottom of the 2017 index in ranking 46th and 47th, respectively. The bottom three spots remained unchanged with California at 48th, New York at 49th and New Jersey dead last at 50th. Those states impose comparatively high tax rates under complex systems.