Report: ME taxes best for new investment
Maine ranks best in the nation for imposing the smallest tax burden on new business investment, according to a report from the Council on State Taxation and Ernst & Young.
The report, "Competitiveness of state and local business taxes on new investment," put Maine at No. 1 for having the lowest tax burden for new investment, citing factors such as a favorable corporate income tax apportionment formula, low state and local tax rates and a property tax exemption for new equipment. The report found that Maine's high corporate tax rate is offset by the income apportionment formula, and that combined state and local sales tax rate is 5%, lower than the national average of 6.2%. It also highlighted the state's Business Equipment Tax Exemption and Business Equipment Tax Reimbursement programs, which exempt new equipment from property taxes and refund local property taxes paid on qualified equipment, respectively.
The report calculated the state's effective tax rate for new investment to be 3%. New Mexico, ranked 51 out of the 50 states and Washington, D.C., was 16.6%. The 50-state mean was 7.9%. "While non-tax cost factors are usually more significant in determining the overall cost of operating a facility in each state, tax factors can be a determining factor between states with otherwise similar non-tax costs," the report concludes.
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