Tax Foundation Business Climate Index Misrepresents the Significance of Oregon’s Low Business Taxes

On February 27, 2006, the Tax Foundation released a paper claiming that Oregon’s economic future is bright because its business taxes are low compared to the rest of the nation. This overly simple conclusion is fundamentally flawed.

The Tax Foundation’s 2006 State Business Tax Climate Index compares the tax structures of the 50 states.1 The Index defines “business taxes” as a weighted combination of corporate income taxes; sales, excise and gross receipt taxes; unemployment insurance taxes; wealth taxes (including property taxes), and personal income taxes. States with low business taxes fare best on the Index. The Tax Foundation claims that states with low business taxes are better positioned to compete with other states and other countries. Read more (PDF)