Minnesota ranked near last in yet another report on business-friendly tax and regulatory policies.
The Small Business & Entrepreneurship Council (SBE) on Thursday released its annual index that ranks states on policy measures and costs that impact small businesses and entrepreneurship, and Minnesota just cleared the bottom five, ranking 45th in the country.
The SBE bills itself as a nonpartisan, nonprofit advocacy and research group that promotes small businesses and entrepreneurship.
The list analyzes tax, regulatory, and government spending policies across the country and determines which states, according to the SBE’s measures, have the most “entrepreneur-friendly policies.”
The top entrepreneur-friendly 15 states, in order, are: South Dakota, Nevada, Texas, Wyoming, Florida, Washington, Alabama, Indiana, Ohio, Utah, Michigan, North Dakota, Arizona, Colorado, and Virginia.
In contrast, the 10 states with the least-friendly policy environments for small businesses and entrepreneurs, according to the study, are: Rhode Island, Connecticut, Oregon, Iowa, Maine, Minnesota, Hawaii, New York, Vermont, New Jersey, and California, which ranked in last place.
Of the 47 measures that determined the SBE’s rankings, the organization said 22 pertain to taxes, 14 relate to regulations, five deal with government spending and debt issues, and the rest gauge the effectiveness of “various important government undertakings.”
The SBE tallied all the measurements and added them together to reach an overall score. According to the list, the lower the score, the lighter the governmental burdens, and the better the environment for entrepreneurship.
The top state, South Dakota, received a score of 34.6, while the bottom state, California, received a score of 113.6. Minnesota, with a score of 103.5, was among seven states with a score that exceeded 100.
The SBE also researched population growth among the top 25 “business-friendly” states versus the bottom 25 and determined that the top states saw a gain of 2.79 million, versus a gain of 1.77 million in the bottom states—meaning the top states grew at a 46 percent faster pace.
The report follows a similar business climate study in October, in which the Tax Foundation ranked Minnesota the fourth-worst state for business taxes.
However, both of those reports differ dramatically from a list Forbes magazine released in September, which ranked Minnesota the eighth-best state for businesses in 2013.
While Forbes also measured similar statistics as the SBE council and the Tax Foundation, such as business costs and regulatory environment, it also factored in quality of life, which managed to pull Minnesota up the list.
Other studies have also provided mixed signals about entrepreneurship in Minnesota. Click here to learn more.
This article is reprinted in partnership with Twin Cities Business.