Business tax study puts N.H. in the middle

Another study of New Hampshire’s business climate has determined that the state’s tax burden on small business is neither among the best nor the worst in the nation.The Granite State’s small business tax climate ranks 25th best in the country, according to the study, which was penned by the Small Business and Entrepreneurship Council, a Virginia-based nonprofit that advocates for small business.In drawing up the report, the SBEC looked at the tax systems in all 50 states and the District of Columbia in terms of how supportive they are for entrepreneurs and small businesses.In New Hampshire, small businesses are a vital part of the state’s economy. In 2009, small businesses in the state totaled 131,100, according to the most recent state profile released in 2012 by the U.S. Small Business Administration’s Office of Advocacy. (The SBA defines small businesses as those with fewer than 500 employees.)In New Hampshire, small businesses “represent 96.2 percent of all employers and employ 51 percent of the private-sector workforce,” reads the state profile. “Being such a large part of the state’s economy, these businesses are central to New Hampshire’s health and wellbeing.”The survey looked at 18 different tax measures and assigned each state one combined tax score. Among the taxes included are income, capital gains, property, estate, unemployment and various consumption-based taxes, such as state’s tax on gasoline.Since New Hampshire has no personal income tax or individual capital gains tax, it of course fared well in that ranking, tying for first place.But the state didn’t fare so well when comparing top corporate income tax rates and corporate capital gains tax rates, both of which are 8.5 percent. They earned the state a 37th and 38th place ranking, respectively.And the state came in dead last in the nation for its property tax burden, at a 5.75 percent share of personal income.”Property taxes influence decisions as to where businesses, entrepreneurs and employees choose to locate, as well as decisions relating to investments in business facilities and homes,” says the study.The state performed relatively well in other categories, including sales, gross receipts and excise taxes (fourth); unemployment tax rates (18th); gas tax (10th); and wireless tax (19th).According to the ranking, the states with the most small-business friendly tax systems are, in order, South Dakota, Texas, Nevada, Wyoming and Washington. The worst, it found, were Iowa, New York, New Jersey, Minnesota and D.C. — KATHLEEN CALLAHAN/NEW HAMPSHIRE BUSINESS REVIEW