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Ranking the Rankings

Published Thursday Jul 12, 2012

State officials and businesses are quick to point to NH's high ranking on The Tax Foundation's State Business Tax Climate Index when marketing the state to clients. But while The Tax Foundation ranks us 6th for best tax climate, the Small Business and Entrepreneurship Council ranks us 25th and a CNBC Report on America's Top States for Business from 2011 ranks us 17th. That begs the question: Which survey is right? All of them and none of them, say economists. It all depends which numbers they use and how they use them. Here's a quick breakdown of the three studies mentioned above:

The Tax Foundation: Looks at five different taxes, but puts more emphasis on the lack of a sales tax and income tax, ranking NH high despite its coming in 41st and 46th for property taxes and corporate income taxes.

Small Business and Entrepreneurship Council: Looks at 18 different tax measures including the ones mentioned above as well as inheritance taxes and consumption-based taxes like gas and diesel levies.

CNBC Report: Looks at categories including business friendliness, cost of living, access to capital, quality of life and infrastructure. New Hampshire scored high on cost of living (2nd) and business friendliness (6th) but low on infrastructure and transportation (45th) and cost of business (37th).

Economist Dennis Delay of the NH Center for Public Policy Studies says a study done a year ago by three economists looking at 11 different business climate index studies found that studies looking at taxes and costs could predict economic growth, particularly in manufacturing, but things like industry mix, population density and weather are even better predictors of economic growth, which the three studies above gave minimal to no attention.

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