For the third year in a row, the state of Colorado has fallen in the Tax Foundation’s State Business Tax Climate Index. In the 2011 ranking (which measures the 2012 year), Colorado was 16th in the nation for business tax burden, but this year’s report has Colorado at 19. In addition to the overall rate damage, Colorado also has fallen in the following categories in 2014 (published in 2013): corporate tax rank (slipped from 20 to 21) and property tax rank (fell from 9 to 22). Sales tax rank remained constant at 44. Individual income tax rank rose to 15 from 16, but we have to wonder where that number will go should Amendment 66, and its billion dollar tax increase, pass.
Here is an overview of the past three years that we compiled:
The Tax Foundation looks at characteristics like complexity of taxes and the comparative rate of taxes. While Colorado scores in the middle, the overall downward trajectory is disturbing. Here is what the Tax Foundation said about the rankings and how they reflect competitiveness:
“The modern market is characterized by mobile capital and labor, with all types of business, small and large, tending to locate where they have the greatest competitive advantage. The evidence shows that states with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth.”
Another disturbing trend of note is how our neighbors and competitors fare in contrast to Colorado. Neighbor Wyoming ranks as the best tax climate in the country, followed by South Dakota (#2) and Nevada (#3). Utah comes in at #9. Competitors Texas (#11) and Florida (#5) are, unsurprisingly, lower. With a slew of new taxes on the horizon, we wouldn’t be surprised to learn that Colorado’s 2015 ranking, which will be published next year, would fall considerably. This could scare business considering relocation away, meaning there could be fewer jobs and fewer opportunities for Coloradans.
Just thank your Gill-purchased legislature.