Tennessee ranks in top third of U.S. tax systems

Tennessee ranks in top third of U.S. tax systems

November 17th, 2015 by Staff Report in Business Around the Region

In Chattanooga, $100 buys $110 worth of goods and services, according to a recent study by the U.S. Bureau of Economic Analysis, and study analyses by The Tax Foundation. Chattanooga possesses the greatest purchasing power of Tennessee's four largest metropolitan areas.

Photo by Xaume Olleros

Tennessee's Business Tax Climate Index ranks in the top third nationally.

The ranking is compiled by the Tax Foundation as a way for the public and policymakers to gauge their state's national standing, according to the foundation's website. The index compares five areas of taxation that impact business: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes.

While total taxes paid is a key statistic in rankings, the Tax Foundation's data evaluated other elements of state tax systems as well to rank each state. Tennessee ranked 15th, just ahead of neighboring North Carolina. Wyoming ranked first overall while New Jersey ranked last at 50th.

The Volunteer State's best ranking came for its individual income tax where it ranked 8th. Its worst category, sales tax, ranked amongst the worst in the U.S. at 48th. The low sales tax rating is due to the state's lack of a traditional income tax which puts more strain on its sales tax. Tennessee ranked the best amongst neighboring states. Kentucky, Virginia, Georgia, Alabama and Arkansas did not rank amongst the top 25 while North Carolina and Mississippi fell just behind Tennessee at 16th and 18th, respectively.