February 2012                                                                                                                 http://parca.samford.edu

In This Issue
Alabama's Business Tax Climate
PARCA News & Updates
PARCA Friends on the Move


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Greetings from PARCA


Dear PARCA Supporter,     


Now that the excitement from the annual meeting is over, it is time to return to business as usual.  Our mission of providing you with objective, nonpartisan information to use in improving state and local government has never been more important.


If you haven't seen the 2011 PARCA Annual Report, please take a look.  It describes the work we have been doing to improve state and local government in Alabama over the past year.


Other projects that we have been working on can be read in detail on our website, http://parca.samford.edu.


Thank you so much for your support.


Jim Williams

Executive Director

Alabama's Business Tax Climate


State and local taxes represent a substantial business cost for corporations operating in the United States.  Although the globalization of commerce and international competition both play a role in economic development for states, most sizeable job relocations are from one state to another.  It is important for business leaders and lawmakers to know how their states' tax systems compare, and make decisions accordingly.


The Tax Foundation recently published the 2012 State Business Tax Climate Index.  It is a comprehensive state-by-state analysis of tax burdens throughout the country.  The index not only includes each state's corporate income tax structure, but also uses individual income taxes, sales taxes, unemployment insurance taxes and property taxes. With complex methodology, the index uses these tax rankings, which are assigned various weights of importance, to determine the overall business tax climate index.  This system of measurement allows for a comparative, detailed assessment of the tax environment in each state.  According to the Tax Foundation:


"In reality, tax-induced economic distortions are a fact of life, so a more realistic goal is to maximize the occasions when businesses and individuals are guided by business principles and minimize those cases where economic decisions are influenced, micromanaged, or even dictated by a tax system. The more riddled a tax system is with politically motivated preferences, the less likely it is that business decisions will be made in response to market forces. The Index rewards those states that apply these principles."


The map below, which can be found in the report, shows the 2012 business tax climate index by state. The higher the score, the more favorable a state's tax structure is for business.  As you can see, Alabama ranked 20th on the business tax climate index.  States surrounding Alabama received a range of rankings.  Georgia, with a ranking of 34th, came in behind Alabama, while Tennessee (14th) and Mississippi (17th) both exceeded us.  There are many factors that can affect a state's tax climate.  The absence of a major tax can obviously improve a state's ranking.  That can be seen with Tennessee, which does not have an individual state income tax.   

Business Tax Climate Index

To read the full report, 2012 State Business Tax Climate Index, including detailed tables, click hereA more in-depth report by The Tax Foundation, entitled Location Matters: A Comparative Analysis of State Tax Costs on Business highlights the sometimes surprising differences in how different kinds of businesses are taxed within the same state.  It can be read here.



PARCA News & Updates


PARCA Survey, Part 2


In addition to questions regarding public policy, the 2012 PARCA Survey included five questions about current and expected economic conditions. The use of these questions makes it possible to compare economic evaluations and expectations in Alabama to the nation as a whole. To read an analysis of the questions posed in the survey, click here.


Following the release of the survey, PARCA received acknowledgement from several news sources. The articles below discuss the survey results in relation to specific issues in Alabama.


Also, PARCA Research Coordinator Joe Adams weighed in about the current economic conditions and the ability for deferred projects to get back on track for cities in the Birmingham metro area.  To read this article, click here. 


PARCA Friends on the Move


  • HealthSouth CEO and PARCA Board member Jay Grinney has joined the board of directors for the Community Foundation of Greater Birmingham.  Click here to read more.
  • American Heart Association is set to honor Energen CEO and PARCA Board member James McManus II at the 25th annual Heart Ball.  To read more about this conferral, click here.
  • PARCA Roundtable member Daniel Murphy joins Bradley Arant Boult Cummings. For more information, click here.
  • Several members of the PARCA Roundtable were named in the Birmingham Business Journal's 2012 "Top 40 Under 40."  Members honored include: