Is Your State Hostile to Small Business?

by Raymond J. Keating

As we have seen over and over again, public policy can be a huge obstacle to entrepreneurship. Politicians like to serve up nice talk about small business, but all too frequently, public policy raises costs, creates uncertainty, and diminishes incentives for starting up and investing in businesses.

And it’s not just the federal government that does this — state and local politicians and appointees do it, too.

That’s where the “Small Business Survival Index: Ranking the Policy Environment for Entrepreneurship Across the Nation” comes in. This report from the Small Business and Entrepreneurship Council ranks the 50 states and D.C. according to 38 major government-imposed or government-related costs affecting investment, entrepreneurship, and business.

The worst of the lot? In order: 42) Minnesota, 43) Massachusetts, 44) Hawaii, 45) Rhode Island, 46) Maine, 47) Vermont, 48) California, 49) New York, 50) New Jersey, and 51) the District of Columbia. Few surprises here — these are all states that love to spend, tax, and regulate.

The Top Ten states are: 1) South Dakota, 2) Nevada, 3) Texas, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) South Carolina, 9) Ohio, and 10) Colorado.

By the way, the top five states impose no personal-income, individual-capital-gains, corporate-income, and corporate-capital-gains taxes. That’s smart public policy.

To see where your state ranks and to download the entire study, go here.

Raymond J. Keating is the chief economist for the Small Business and Entrepreneurship Council, and author of the Small Business Survival Index.

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