Nevada welcomes small businesses

When the Small Business Survival Council ranked Nevada as the second friendliest state for small business, the state's near-total freedom from business and income taxes played a major role.

Economic development officials last week moved quickly to make sure that companies interested in moving to Nevada companies in California, in particular got the word.

Lisa Plummer, who spearheads recruiting efforts for the Economic Development Authority of Western Nevada, said the council's recent study of business costs is "very important" to EDAWN's work.

While EDAWN and other industrial recruiters have been aggressively comparing the costs of doing business in California and Nevada, Plummer said the council's study provides independent verification.

And she said the council's focus on taxes as a key element provide strong support for the argument Nevada officials have been making.

Nevada, which ranked below only South Dakota in the small business survival index, scored particularly well on tax categories of the study.

The state has no personal or corporate income tax, no capital gains tax and no alternative minimum tax for individuals and corporations.

By comparison, the top personal income tax rate in California is 9.3 percent and the top corporate rate in the Golden State is 8.84 percent.Overall, California ranked 46th on the small business survival index.

Outside the business and income tax categories, Nevada's rankings were mixed.

Its gasoline tax of 33.2 cents a gallon, for instance, is the second highest in the country.

Only Hawaii is higher.

Local property taxes in the state were 14th highest in the nation.

California, where property taxes are restricted by Proposition 13, ranks 13.

Sales and excise taxes, meanwhile, take a 5.42 percent bite out of personal income in Nevada.

That's among the highest percentages in the nation.

California's figure is 3.33 percent.

The situation is mixed, too, on other key business costs.

Thirty-nine states, for instance, have lower electric costs.

But Nevada's healthcare costs are fifth best in the nation, the Small Business Survival Council found.

Thirty-five states have workers compensation costs lower than Nevada, but the state still wins in a key comparison.

California's costs are even worse, ranking sixth from the bottom.

Among the big factors that keep Nevada from the first-place spot held by South Dakota are the sales tax bite, electric rates and the gas tax.

The five worst states for small business, according to the report, are California, Rhode Island, Maine, Minnesota and Hawaii.

Each of them has top income tax rates in the 8 to 9 percent range.