Tax bite biggest in N.Y.

Don't expect Citigroup Inc., the Carnegie Deli or any other Big Apple business to relocate to Sioux Falls anytime soon, but the moves certainly would make tax sense. New York ranked dead last among states in terms of business tax climates, according to the latest research by the Tax Foundation, a non-partisan tax policy research group, while South Dakota retained its No. 1 position for a second year. To earn its dubious ranking, the Empire State, which was in 49th place last year, bumped neighboring New Jersey, which improved to 48th place. “It's not that some states tax more or less; it's that they tax in a non-neutral way,” Kail Padgitt, staff economist at the foundation, said of the rankings. “States need to be more broad-based in the way they tax,” he said. “For instance, if they give a tax credit to a business, they are raising taxes somewhere else on someone else.” It was that kind of imbalance that hurt Connecticut's ranking, according to Mr. Padgitt. The state dropped to 47th place, from 38th last year, primarily because of the introduction of an income tax on those who earn more than $500,000 a year, he said. In Arizona, the decline to 35th place, from 28th, was due to largely to a 1-percentage-point increase in the state sales tax to 6.6%, in addition to some new local-jurisdiction sales taxes, Mr. Padgitt said. According to the report, the top-ranked states share similarities in raising revenue without imposing one or two of the three major state taxes: sales taxes, personal income taxes and corporate income taxes. Bottom dwellers on the list tend to have complex, multirate corporate and individual income taxes, with above-average tax rates, above-average sales taxes that don't exempt business-to-business purchases, complex and high-rate unemployment tax systems, and high property taxes.