Fifth-worst: Vermont
Vermont is among the list of states with high taxes on personal and corporate income, as well as high taxes on individual and corporate capital gains. The state also has high property taxes, high electric utility costs and high workers' compensation costs, according to the SBE Council's report, as well as poor private property protections.

On the flip side, the Green Mountain state has very low crime and no individual or corporate alternative minimum tax, SBE Council says.

That being said, Vermont's new governor, Democrat Peter Shumlin, a small-business owner himself, pledged to create jobs and relieve taxpayers of the high burden of state taxes.

In his inaugural address this month, Shumlin put forth an aggressive agenda in which fostering entrepreneurship and combating the high cost of health care were priorities.

"Finally, my jobs agenda will expand the ability of emerging enterprises and businesses to access capital and credit when they need it the most," Shumlin stated in his speech. "If our Green Mountain State can be recognized by young entrepreneurs as the innovative leader in financing and venture capital for micro-businesses when banks say 'no,' small businesses will thrive."

Shumlin identified one possibility: taking advantage of the federal EB-5 Immigrant Investor program for venture capital.

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