STATE BUSINESS TAX CLIMATE - HOW SHOULD IT BE MEASURED AND HOW IMPORTANT IS IT

States are more concerned than ever before about their business tax cl imate. Over the past two decades, profound technological and political changes have enhanced employers' geographic mobility and extended the ir geographic range, thereby intensifying economic competition both wi thin the United States and throughout the world. This study ranks the business tax climate of 22 states, including the six within New Englan d. It finds only modest differences in business tax climate among most states. Within the region, New Hampshire and Massachusetts have the m ost attractive business tax climates. The study also estimates the imp ortance of business tax climate in determining where manufacturers inv est in plant and equipment. Business tax climate exerts only a small, highly uncertain effect on such investment. States may be more likely to stimulate their economy by enhancing public services valued by busi ness.