California Gov. Jerry Brown presents his proposed state budget, which needs tax hikes to balance. (Lezlie Sterling / MCT / January 5, 2012)

By Marc Lifsher
January 25, 2012, 10:43 a.m.

California’s combination of business, sales, income and other taxes ranks it close to the bottom of the 50 states for being business-friendly, according to an index put out by a conservative Washington think tank.

California placed 48th, ahead of only New York at 49th place and New Jersey at 50th, said a report released Wednesday by the Tax Foundation.

The findings are likely to become an issue in a campaign by California Gov. Jerry Brown to put an initiative on the November ballot to temporarily raise the state sales tax and the individual income tax for people who make over $250,000 a year. Brown wants the money to pay down state debt, boost school spending and balance the budget.

Gil Duran, a Brown spokesman, dismissed the Tax Foundation findings as politically motivated.

“This is a partisan group funded by conservative foundations and its assertions must be taken with a grain of salt,” he said. “California added 230,000 jobs in 2011 and personal income grew by $100 billion — far outpacing the nation. Our state is attracting business and investment from around the world.”

According to the foundation, the top 10 states with business-friendly taxes were Wyoming, South Dakota, Nevada, Alaska, Florida, New Hampshire, Washington, Montana, Texas and Utah, the report said. Many of them made it to the top tier because they don’t collect a major tax, such as on corporate income.

“Even in our global economy, a state’s stiffest and most direct competition often comes from other states,” said Tax Foundation economist Mark Robyn. “State lawmakers need to be aware of how their states’ business climates match up to their immediate neighbors and to other states in their region.”

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