Small Business Climate

High-tax, high-cost Massachusetts is often portrayed as hostile to the entrepreneurial spirit. But in the new Small Business Survival Index, compiled by a Washington, DC-based advocacy group, the Bay State scores just above the middle of the pack. The index is a quirky sum of measures that severely punishes states like Massachusetts for high personal and corporate income taxes (the phased-in cut of the personal income tax rate to 5 percent will, by itself, move us up just one notch in the overall ranking). But no taxes on long-term capital gains and sales taxes that are 12th-lowest in the country as a portion of income give the Bay State’s business climate a boost. More surprising Massachusetts advantages: low workers’ compensation costs ( second-lowest in the nation) and a low proportion of state and local bureaucrats (tied for eighth, as a percentage of the population).

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