Maine ranks 48th for business National report cites heavy taxes, high cost for workers’ comp

PORTLAND – Maine ranks near the bottom on a list of the best states in the nation for small business and entrepreneurship, according to a national report released Monday.

The rankings were based on 17 government-imposed or government-related costs affecting small businesses and entrepreneurs, including taxes, electricity, workers’ compensation and minimum wages.

The District of Columbia, which was included in the state ranking, came in last place, followed by Rhode Island, Hawaii and Maine. Maine dropped from 42nd place in the survey last year to 48th this year.

Maine’s poor showing was because of burdensome taxes on personal income, capital gains, corporate income and property, according to The Small Business Survival Index 2001. In addition, Maine carries high workers’ compensation and electricity costs, the report said.

John Butera of the Maine Department of Economic and Community Development said the report focused too much on taxes and not enough on other factors, such as the state’s educated and productive work force.

“It’s frustrating sometimes to have information like this that doesn’t really portray the true reality of the business climate in Maine,” said Butera, director of business development for Maine.

The best state for small business was Nevada, followed by South Dakota, Washington, Wyoming, Florida and Texas. Vermont ranked 42nd on the list, while neighboring New Hampshire ranked seventh.

New Hampshire’s ranking “is particularly due to the state imposing no general personal income and capital gains taxes,” said Raymond Keating, chief economist for the group and author of the study.

The report was conducted for the Small Business Survival Committee, a nonprofit small business advocacy group in Washington.

It came a week after The New York Times reported that Mainers led the nation in the percentage of per capita income paid in state and local taxes. The figures were based on 1998 census data.

Butera said the state is aware of the problems and has made strides in tackling them. But progress doesn’t come overnight.

“We do recognize that we have a ways to go in some of our policies and initiatives. We recognize where the deficiencies are and we’re trying to do something about it,” he said.

For example, the state has lowered the sales tax, cut workers’ compensation costs and created thousands of jobs, he said.

David Clough, director of the National Federation of Independent Businesses in Maine, said state leaders need to take the report seriously.

“The tendency to brush aside reports like this that have an unpleasant message can send a message to people in Maine thinking about expanding their business,” he said. “The message may be that the political leadership is in a state of denial.”

On the Web:

Small Business Survival Committee: http:///www.sbsc.org