West Virginia has the worst legal climate in the U.S., followed by Louisiana, Mississippi, Alabama and California, according to a survey of corporate attorneys and business executives.

The survey, which was conducted for the U.S. Chamber of Commerce's Institute for Legal Reform, asked respondents to rank states based on their overall treatment of tort, contract and class-action litigation, including the impartiality and competence of their judges and the fairness of their juries.

Delaware was ranked No. 1, followed by North Dakota, Nebraska, Indiana and Iowa.

Two-thirds of the corporate attorneys and executives surveyed said a state's legal climate is likely to affect company decisions, such as where to locate or expand.

"States can no longer afford to discourage new business and new jobs as a result of a dysfunctional legal climate," said Lisa Rickard, president of the institute.

California judges, for example, are more willing to certify class actions than judges in most other states, according to the institute. As a result, four class actions are filed there every day, on average. In addition, out-of-state law firms have been opening offices in California to file asbestos claims that would have been barred in their home states, the institute states.

The U.S. Chamber plans to run a two-minute ad at 300 movie theaters across the country, featuring businesses that have been hurt by costly lawsuits.

"We want people to see the real-life consequences of these lawsuits," Rickard said.

Trial lawyers dismissed the rankings as unscientific, contending that the chamber only wants to protect corporations from oversight and accountability.

"The chamber's report is just another attempt to weaken the civil justice system to help its Wall Street and big-business financers," said Ray De Lorenzi, a spokesman for the American Association for Justice. "The American people have seen what happens when the chamber's largest clients - like AIG, insurance and drug companies - are not held accountable. This is just one more call from the corporate lobby to bail out negligent corporations while everyday Americans are left holding the bag."

For more: www.uschamber.com.

Employers get tax breaks for new workers

Employers won't have to pay their share of Social Security taxes for many workers hired this year, thanks to legislation signed into law March 18.

The break was created by the Hiring Incentives to Restore Employment Act, which cleared the Senate on a 68-29 vote. The payroll-tax break will apply to workers hired after Feb. 3 who had been unemployed for 60 days prior. Employers must continue to withhold the employees' share of Social Security payroll taxes, as well as both the employer and employee shares of Medicare taxes.

Employers will claim the payroll tax benefit on the federal employment tax returns they file, starting with the second quarter of 2010.

Businesses and nonprofit organizations also will be able to claim an additional tax credit of up to $1,000 for each new worker on their 2011 income-tax returns, provided that the workers are retained for at least a year.

President Barack Obama said the tax incentives for hiring workers "will be particularly helpful for small-business owners. Many of them are on the fence right now about whether to bring on that extra worker or two, or whether to hire anyone at all. This jobs bill should help make that decision easier."

New hires will be required to certify that they were unemployed for 60 days before beginning work, or worked fewer than 40 hours during this period. The IRS is developing forms for this statement and the two tax provisions.

Small businesses also can benefit from the bill's extension of higher limits on Section 179 expensing. As a result, small companies can write off $250,000 of the cost of new equipment purchased this year, instead of depreciating those costs over time.

For more: www.irs.gov.

State tax revenue falls 9%, likely to keep falling

State tax collections fell by nearly 9 percent last year, to $715 billion, according to the U.S. Census Bureau.

Individual income-tax collections fell nearly 12 percent, to $246 billion, while sales taxes fell by more than 5 percent, to $228 billion. Corporate income taxes plummeted nearly 21 percent, to $40 billion.

Arizona experienced the biggest percentage drop in individual income tax revenue: 43 percent. Michigan took the biggest hit on corporate income taxes: 64 percent.

Severance taxes, which are imposed on removal of natural resources such as oil and coal, dropped 27 percent last year after jumping 65 percent in 2008. Revenue from mortgages, deeds or securities dropped 36 percent, with the largest decreases occurring in the South.

The declines in tax revenue have forced states to reduce spending. States cut their general-fund expenditures by nearly 5 percent in 2009, according to the National Governors Association, and they are expected to cut spending by an additional 4 percent this year as revenue collections continue to decline.

The association predicts that state revenue likely will continue to be depressed in 2011 and 2012, as state tax collections tend to lag national economic recovery.

For more: www.census.gov.

Kent Hoover is Washington Bureau chief for American City Business Journals.