Rank: 49
Index score: 65.12

California has the highest personal income and capital gains taxes in the nation, a high corporate income tax, a high minimum wage, significant health insurance regulations, and high electric costs. Proposed cigarette, property, corporate income and energy production taxes are on the ballot this November, as is a proposition improving property rights protections. Of course, California enjoys a lot of advantages - natural beauty, dedicated residents, and strong tech and entertainment sectors - that attract entrepreneurs. "There are so many opportunities," says Kerrigan. "Even if taxes get worse, people will stay, but it doesn't stop businesses from leaving either."