Why do some state and local economies thrive while others stagnate? Why do some rely on the presence of specific large companies or industries, while others attract a broad base of investment and economic activity? A new study by Atlas Network partner the Tax Foundation, produced in collaboration with tax auditing and advisory firm KPMG LLC, provides a comprehensive “apples-to-apples” analysis of how a wide array of taxes affect the bottom lines of businesses operating in each state, and of the incentives that these policies create for business creation and relocation. Titled “Location Matters: A Comparative Analysis of State Tax Costs on Business,” the study models several different business types, in multiple stages of growth.
“The study accounts for all business taxes: corporate income taxes, property taxes, sales taxes, unemployment insurance taxes, capital stock taxes, inventory taxes, and gross receipts taxes,” wrote the John Templeton Foundation, which supported the project with a grant, in its report on the study. “This is significant because different states load taxes in different ways upon businesses. For example, Pennsylvania’s tax burden is relatively low on factories, especially in heavy industry, but relatively high for corporate headquarters. Alternatively, retail stores—and new operations in particular—have many business expenses generally subject to sales tax, and thus do well in a state without a sales tax.”
The Tax Foundation’s companion project, “State Business Tax Climate Index,” has been nominated for Atlas Network’s prestigious $100,000 Templeton Freedom Award, along with five other worthy projects from Atlas Network partners, to be awarded at Liberty Forum & Freedom Dinner in New York City on Nov. 11–12. These two comprehensive analyses of state taxes throughout the United States provide the tools necessary for businesses to choose the most optimal tax climates for investment, and for policymakers to reform their own tax regimes and boost economic development.
- Read the “Location Matters: A Comparative Analysis of State Tax Costs on Business.”
- Watch the Tax Foundation’s video introduction to the study.
- Read the John Templeton Foundation’s report on the study.