California is One of the Terrible 10 Blue States on Taxes

Here’s the latest ranking from the Tax Foundation on economic competitiveness of their taxing system. Stephen Moore at Unleash Prosperity notes that taxes are headed up in 2026 in the three already-heaviest taxed states.

The 10 best states in this year’s Index are:

1. Wyoming
2. South Dakota
3. New Hampshire
4. Alaska
5. Florida
6. Montana
7. Texas
8. Tennessee
9. Idaho
10. Indiana

The Tax Foundation explains that it’s the absence of a major tax that is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. South Dakota and Wyoming have no corporate or individual income tax; Alaska and New Hampshire have no individual income or state-level sales tax; Florida, Tennessee, and Texas have no individual income tax; and Montana has no sales tax.

They note that this does not mean that a state cannot rank well while still levying all the major taxes. Idaho and Indiana levy all the major tax types, as do all the other states that rank 11^th to 16^th: North Dakota, North Carolina, Missouri, Arizona, Utah, and Michigan.

The 10 lowest-ranked, or worst, states in this year’s Index are:

41. Hawaii
42. Vermont
43. Massachusetts
44. Minnesota
45. Washington
46. Maryland
47. Connecticut
48. California
49. New Jersey
50. New York

The states in the bottom 10 tend to have a number of issues in common: complex, nonneutral taxes with comparatively high rates. New Jersey, for example, is hampered by some of the highest property tax burdens in the country, has the highest-rate corporate income tax in the country, and has one of the highest-rate individual income taxes. Additionally, the state has a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.

The primary differences between #48 California and #1 Wyoming are:

California is ranked 41st for corporate taxes, 49th for individual taxes, 46th for sales taxes, 27th for property taxes, and 26th for unemployment taxes.

Wyoming is ranked 1st for corporate taxes, 1st for individual taxes, 6th for sales taxes, 37th for property taxes, and 33rd for unemployment taxes.

The bottom line is that it’s far more attractive to do business in Wyoming, to live in Wyoming, and to buy anything in Wyoming.

Florida, ranked #5 overall, is ranked 17th for corporate taxes, 1st for individual taxes, 6th for sales taxes, 20th for property taxes, and 8th for unemployment taxes.

Florida Governor Ron DeSantis is even pushing to eliminate property taxes on primary residences.

And remember, while California is ranked 27th for property taxes, that is only because of Proposition 13, the 1978 ballot initiative overwhelmingly passed by California voters, which reduced property tax rates on homes, businesses, and farms by about 57%, and limited reassessment at 1% of the new market value with the 2% yearly cap placed on this new assessment.

Democrats have tried to overturn Prop. 13 every year with dubious claims including claims that public schools have been robbed of necessary revenue, and that businesses have not been paying their fair share of property taxes.

Even with Prop. 13, California is still in the middle of the pack on property taxes. And for that we are thankful.

Here is the state competitiveness index: