The Tax Foundation presented the 2008 version of the State Business Tax Climate. The research is a valuable tool in comparing the level of competitiveness among states regarding the favorability of tax regime for business and capital creation. Through empirical point of view, the productive mechanisms such as investment and labor supply (link) are highly sensitive to tax rates and the level of levied taxes which businesses and individuals have to bear.
The index shows that Wyoming's tax system is best for business (link). California, New York and New Jersey occupy 47th, 48th and 49th place on the index respectively. The lesson is that states with higher income taxes stagnate in terms of the quality of the business environment. Nevertheless, taxes are an important part of state's competitive position, seeking to attract investment and labor supply. On the other hand, states with lower or zero-income tax benefit from low tax burden and business climate favorable to job creation and capital creation, thus receiving high rewards from competitiveness efforts.