From the March 2001 issue of Startups

So what? Well, that was my first reaction when a friend told me I should reconsider my plan to move to New Mexico because, as he put it, "the gross receipts tax will pick your pocket clean of everything but lint." The bottom line: New Mexico takes your gross, grabs its percentage and calls it a square deal.

Is it? Not when you cut your gross in half once ordinary, honest business expenses are deducted. That's the norm for me, and, plainly put, my gross might be $150,000, but by the time I finish taking Schedule C deductions, that amount has dwindled down to, say, $75,000, which is the portion the IRS wants taxes on.

Not New Mexico. It wants its GRT collected on the whole $150,000-and then it wants to collect income tax, too. That adds up. In my case, had I moved to New Mexico, I would pay the state about twice what I would pay Arizona, its western neighbor, and about four times what Nevada wants. How much are we talking about here? New Mexico wanted about $20,000 from me (in GRT, income tax and property tax), whereas Arizona wants $10,000 and Nevada will settle for $5,000.

What's particularly tragic here is that this is a state with little industry. It tops the nation in poverty rates, according to the U.S. Census. It desperately needs to lure businesses into its borders, but somehow, the pols in Santa Fe don't get that this GRT is tantamount to erecting a "Homebased Business Go Away" sign. Certainly, any home- based business owner who can do a little math will point the U-Haul to anyplace but the Land of Enchantment.

Why? The great advantage of most homebased businesses is that they're portable. We can pack up and go in search of a better business climate, better weather, a better tax situation, whatever we value. In my case, that's exactly what I decided to do, meaning I nixed my pending move to New Mexico and am now studying up on other locations.

Click Here

It's easy to put together what-if tax scenarios. Just use the tools at personal finance Web site Bank Rate. Are you living in the right state? Click around Bank Rate for an hour or so and you'll know.