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In fact, six of the top 10 states with the best business climate are western states, bolstered at least in part by new revenues from energy production that allows them to reduce other types of taxes. In many cases, the top-ranked states omit at least one major stream of revenue altogether, such as an income tax or a sales tax.
"If you can go without one of the major tax categories, not only do you have one less tool to distort the economy, but you're also getting rid of a ton of overhead costs," said Scott Drenkard, a Tax Foundation economist who co-authored the study. "You're also able to get rid of the dead weight cost on the private side, where people are trying to comply with those taxes."
