The Tax Foundation has released its 2015 Location Matters analysis of business tax burdens in the 50 states. It’s a significant contribution to our understanding of the distribution and competitiveness of business tax burdens across industries. Here’s how the Tax Foundation describes the study:
…the Tax Foundation collaborated with U.S. audit, tax, and advisory firm KPMG LLP to develop and publish a landmark, apples-to-apples comparison of corporate tax costs in the 50 states. Tax Foundation economists designed seven model firms—a corporate headquarters, a research and development facility, an independent retail store, a capital-intensive manufacturer, a labor-intensive manufacturer, a call center, and a distribution center—and KPMG tax specialists calculated each firm’s tax bill in each state. This 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. Additionally, each firm was modeled twice in each state: once as a new firm eligible for tax incentives and once as a mature firm not eligible for such incentives.
Tax Foundation economists then used the raw model results to perform the ensuing industry and state comparisons. The result is a comprehensive calculation of real-world tax burdens…
Washington shows mixed results:
For mature operations, Washington ranks 6th for both retail stores and distribution centers. The effective tax burden for retail is 22 percent below the median, and the tax burden for distribution centers is 27 percent below the median. These firms do well under the state’s gross receipts tax. The state also has a low property tax burden on these operations, although sales tax burdens are high.
By contrast, Washington ranks 46th for the mature corporate headquarters, which experiences an effective tax rate of 19.4 percent, driven by very high unemployment insurance (UI) and sales taxes. Similarly, the new corporate headquarters experiences an effective tax burden 92 percent higher than the median nationwide, driven by extremely high sales and UI tax burdens along with a substantial burden under the state’s gross receipts tax.
Here’s the link to the download for the report. Discuss.