A new ranking from the Small Business and Entrepreneurship Council places North Carolina in the bottom third of the nation for its public policy friendliness towards small businesses—37th and well behind all bordering states. Tennessee is the nearest at 25th, while South Carolina is 5th, Virginia 10th, and Georgia 16th.

Here are the top 15 states:

1. South Dakota 2. Nevada 3. Texas 4. Wyoming 5. South Carolina 6. Alabama 7. Ohio 8. Florida 9. Colorado 10. Virginia 11. Washington 12. Mississippi 13. North Dakota 14. Utah and 15. Arizona.

And the bottom 15:

36. Nebraska 37. North Carolina 38. Maryland 39. Hawaii 40. Illinois 41. Iowa 42. Massachusetts 43. Minnesota 44. Connecticut 45. Maine 46. California 47. Rhode Island 48. Vermont 49. New Jersey 50. New York

Of course, that haven of free enterprise, the District of Columbia, comes in at 51st.

The SBE Council prepared a state-by-state interactive map, along with the full 59-page report, for those curious to examine the findings further. It identifies North Carolina’s particular vulnerabilities that lead to its low score:

• High personal income and individual capital gains taxes

• Imposes a state death tax

• High unemployment taxes (And we still have a $2.6 billion unemployment insurance debt with the federal government! More on that soon.)

• High number of health insurance mandates

• Fairly high crime rate

• High gas and diesel taxes

The author of the report, Raymond Keating, notes that 2009 and 2010 have seen substantial federal aid, but he said that such an approach accomplishes nothing.

“Instead, state and local lawmakers need to be pro-active in advancing pro-growth policies. Economic recovery and job growth, after all, are all about private sector entrepreneurship and investment… they can provide a climate of low taxes, reasonable regulation, and limited government spending…

Unfortunately, as illustrated by the ‘Small Business Survival Index,’ too many elected officials just don’t get it, and impose costly policies that chase away entrepreneurs, businesses, capital and jobs.

But policy leadership is being provided in the states that rank best on the Index. For example, some of the top states don’t just keep income and capital gains tax low, they do not even impose such taxes. That’s bold policymaking and good news for entrepreneurs, small businesses and investors.”