Index score: 40.42

"Washington has no income or capital gains taxes, low electricity costs, and no alternative minimum tax. Measures on the November 7 ballot could eliminate the estate tax and add property rights protections. Washington does have the highest minimum wage in the U.S., but "for the most part, it's a dream place for small business," says Kerrigan. "There's a great entrepreneurial culture - Starbucks started there, Microsoft is located there. It has a young work force, and it's a great place to live and raise a family." Even the notoriously rainy Seattle weather "doesn't seem to cramp their style," she says.