When national and international companies force states into bidding wars over new businesses, they pay attention to more than the temporary incentives placed on the table. The long-term tax and regulatory outlooks are more important.
West Virginia’s ability to compete there has been crippled by its tax climate.
Earlier this year, the Anderson Economic Group looked into the impact of state taxes on businesses. A good gauge, the percentage of companies’ operating margins taxed by the states, was used.
West Virginia has the fifth-highest state tax rate in the nation by that standard, Anderson found. In 2011, state taxes sucked away 14.2 percent of business operating margins, on average. The only states with higher rates were Vermont, Wyoming, North Dakota and Alaska.
Some business tax reform has been accomplished during the past few years. Still, West Virginia has a long way to go to catch up with business magnets such as North Carolina (8.1 percent).
Finding ways to lessen the tax burden on businesses will pay off in the long run. More jobs will mean more tax revenue.
State legislators should make easing the tax burden on businesses one of their top priorities.