Two States Take Title for Worst Tax Climate

Aggressive state auditors and inconsistent tax regimes — most notably in California and New Jersey — are responsible for corporate tax directors’ headaches, according to a survey of corporate tax officers.

The 2007 CFO State Tax Survey,the fifth since 1996 conducted by CFO Publishing, asked corporate tax officials about states’ handling of a number of tax issues, including the fairness of their audit department and the independence of their appeal process.

California was judged as having the worst overall tax environment, narrowly beating New Jersey for the distinction. Both states were considered the worst offenders in nearly every category.

California was also considered the most aggressive state in levying sales and use taxes, while respondents said New Jersey was the state with the least fair auditors. Additionally, New Jersey’s ongoing fiscal crises and hikes in sales taxes were considered disincentives for corporate relocation or expansion in that state.

Among rankings for states having the best tax environment, which the survey describes as being the “most fair and predictable,” were, Nevada was first, followed by: Delaware, Wyoming, South Dakota, and Alaska.

A state’s overall tax climate also weighs heavily in corporate decisions to move to a state or expand operations within a state.

States with the most positive influence on corporate relocations and expansion
Nevada
Delaware
Wyoming
Oregon
Virginia

States with the most negative influence on corporate relocations and expansions
New Jersey
California
Massachusetts
New York
Pennsylvania