Empirical Evidence on the Revenue Effects of State Corporate Income Tax Policies

32 Pages Posted: 23 Jul 2008 Last revised: 22 Sep 2010

See all articles by Sanjay Gupta

Sanjay Gupta

Michigan State University - Eli Broad College of Business

Jared A. Moore

Oregon State University - College of Business

Jeffrey Gramlich

Carson College of Business

Mary Ann Hofmann

Appalachian State University

Date Written: June 1, 2009

Abstract

Using fixed-effects models of state corporate income tax (SCIT) revenues that account for the endogeneity of apportionment formula weights and tax rates, we find that states with a double-weighted sales factor experience lower SCIT revenues than do states with an equally-weighted sales factor, while higher statutory tax rates are associated with higher SCIT revenues. We also find that several other tax policies have statistically and economically significant associations with SCIT revenues. Use of a throwback rule and defining business income more broadly are associated with higher SCIT revenues, while combined reporting surprisingly is not significantly associated with SCIT revenues.

Keywords: State corporate income tax revenues, tax accounting policies, formula apportionment

JEL Classification: H25, H71, H73

Suggested Citation

Gupta, Sanjay and Moore, Jared A. and Gramlich, Jeffrey and Hofmann, Mary Ann Ann, Empirical Evidence on the Revenue Effects of State Corporate Income Tax Policies (June 1, 2009). National Tax Journal, Vol. 62, No. 2, 2009, Available at SSRN: https://ssrn.com/abstract=1163922 or http://dx.doi.org/10.2139/ssrn.1163922

Sanjay Gupta (Contact Author)

Michigan State University - Eli Broad College of Business ( email )

632 Bogue Street, 520 BCC
East Lansing, MI 48824
United States
517-432-6488 (Phone)

HOME PAGE: http://www.broad.msu.edu/

Jared A. Moore

Oregon State University - College of Business ( email )

443 Austin Hall
Corvallis, OR 97331
United States
541-737-2517 (Phone)
541-737-4890 (Fax)

Jeffrey Gramlich

Carson College of Business ( email )

Wilson Rd.
College of Business
Pullman, WA 99164
United States

HOME PAGE: http://https://business.wsu.edu/research-faculty/institutes/hoops-institute/

Mary Ann Ann Hofmann

Appalachian State University ( email )

Walker College of Business
Boone, NC 28608-2037
United States
828-262-6228 (Phone)

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