The Tax Foundation has come out with its 2016 State Business Tax Climate Index. Today's hard-working but struggling physicians-fed up with their current predicament-might want to use the information to make a change in their life.
“A nation trying to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
My physician-dad’s feelings and experiences about paying taxes are similar to those of other busy doctors. In his prime, he probably paid upwards of 40% of his annual income in some form of taxes.
Naturally, he didn’t enjoy paying taxes. But he also thought that they were the price of success and hoped that the entities that collected them would mostly do good works with the tax dollars. He was half right (and his beloved New Jersey is dead last).
The Tax Foundation has come out with its 2016 State Business Tax Climate Index. Today’s hard-working but struggling physicians—fed up with their current predicament—might want to use the information to make a change in their life. There are some golden opportunities—for physicians to find an American state with a “competitive and well-structured tax code.”
According to The Wall Street Journal, “a major reason for the perennial dominance” of some states “is their lack of a personal income tax and low corporate tax burdens. Their sales and property taxes are also relatively modest.”
A nonpartisan tax research group, The Tax Foundation educates taxpayers about sound tax policy and the size of the tax burden borne by Americans. The data they have complied can help physicians to gauge how their states’ tax systems compare.
“States are punished for overly complex, burdensome, and economically harmful tax codes, and are rewarded for transparent and neutral tax codes that do not distort business decisions,” says the Tax Foundation. “A state’s ranking can rise or fall significantly based not just on its own actions, but also on the changes or reforms made by other states.”
Following are the best and worst states rated on their business tax climate (along with the number of active physicians in the state as of 2015, according to the Association of Medical Colleges):
The Top 10 states are:
1. Wyoming (1,149 physicians)
2. South Dakota (1,974 physicians)
3. Alaska (1,883 physicians)
4. Florida (51,160 physicians)
5. Nevada (5,604 physicians)
6. Montana (2,349 physicians)
7. New Hampshire (3,985 physicians)
8. Indiana (14,686 physicians)
9. Utah (6,107 physicians)
10. Texas (57,502 physicians)
The Bottom 10 states are:
50. New Jersey (25,930 physicians)
49. New York (69,861 physicians)
48. California (101,859 physicians)
47. Minnesota (15,438 physicians)
46. Vermont (2,116 physicians)
45. Rhode Island (3,656 physicians)
44. Connecticut (12,148 physicians)
43. Wisconsin (14,677 physicians)
42. Ohio (32,438 physicians)
41. Maryland (22,148 physicians)
Depending on the survey, anywhere from 25% to 30% of today’s practicing doctors are thinking about closing their medical practices. The next step would mean quitting (most doctors can’t), relocating (most doctors won’t), or working for an organization (most doctors are headed this way). But then, change is the price of survival.
On an encouraging front, most of the states with the best business tax climate have few practicing doctors, while the worst tax states appear to be overloaded with physicians.
Go West Doctor!
Note: The 2016 State Business Tax Climate Index is an analysis of over 100 tax variables in five different categories: corporate, individual income, sales, property, and unemployment insurance taxes.