Index: Colorado ranks ninth among entrepreneur-friendly states

Colorado continues to rank among the top 10 entrepreneur-friendly states in an annual analysis of tax, regulatory and spending policies.

Colorado remains ninth overall in the 2012 U.S. Business Policy Index compiled by the Small Business & Entrepreneurship Council, a small business advocacy and research group based in Washington, D.C. The index offers a state-by-state comparison of how 46 different policy measures affect entrepreneurs and small businesses.

“Quite simply, policy decisions matter when it comes to making business and investment decisions,” said Raymond Keating, chief economist of the SBEC. “Entrepreneurs and investors understand this fact of economic life. But it’s hit or miss with elected officials. As illustrated by this index, some get it and some clearly do not.”

Karen Kerrigan, president and chief executive officer of the SBEC, said the focus in recent months on federal policies misses state efforts to enact more business-friendly policies.

“Many governors understand that a friendly policy environment is critical to attracting investment and business, and they are working to improve key policies that will help drive job growth, entrepreneurship and economic opportunity,” Kerrigan said. “Small businesses are befitting from policy competition between the states, and it is encouraging to see leadership on key issues, such as fiscal reform, sensible spending and tax and regulatory relief.”

Colorado consistently ranks among the most entrepreneur-friendly states in the index. Colorado ranked 10th in 2010 and 2008 and eighth in 2009 and 2006. The state never has ranked lower than 12th since 2001.

For 2012, Colorado continues ranks high in the index in large part because of its comparatively low taxes.

Colorado assesses a top rate of 4.63 percent on corporate and individual income and capital gains taxes. That rate ranks anywhere from the eighth to the 19th lowest among the 50 states.

Colorado ranks sixth for the lowest adjusted unemployment tax rate and eighth for the lowest workers’ compensation insurance costs.

Colorado imposes the 14th lowest diesel tax and is tied at 17th for the lowest gasoline tax.

Measured as a proportion of personal income, Colorado assesses the 17th lowest state and local sales taxes, but ranks lower at 34th for its state and local property taxes.

Colorado ranks lower in the index in terms of state and local government spending. Colorado is tied at 28th for per capita spending for the 2009-2010 year and comes in at 36th for the five-year spending trend between 2004-2005 and 2009-2010. Colorado is tied for 22nd for the number of state and local government employees per 100 residents.

Colorado fares worst in the 2012 index in tying for 41st for the number of state-imposed heath insurance mandates.

South Dakota remains atop the ranking of the most entrepreneur-friendly states, followed by Nevada, Texas, Wyoming and Florida. Conversely, California dropped four spots to the bottom to rank as the least entrepreneur-friendly state, followed by New Jersey, Vermont, New York and Maine.