State Corporate Tax Revenue Trends: Causes and Possible Solutions

Posted: 4 Mar 2003

See all articles by William F. Fox

William F. Fox

University of Tennessee, Knoxville - College of Business Administration

LeAnn Luna

University of Tennessee, Knoxville - College of Business Administration - Center for Business and Economic Research

Abstract

States' ability to collect taxes on business, and particularly on interstate business activity, appears to be diminishing. This should not be a surprising outcome since economists have for many years recognized the difficulties for subnational governments to collect taxes on mobile activities. Much recnt attention has been paid to the revenue losses that have resulted from the inability to collect taxes on Internet sales, and in particular on business-to-business transactions. Reduction in state taxation of specific industries such as telecommunications (through lower rates, reduced property tax assessments, and so forth) has taken place as well. Focus has shifted recently to the diminishing relative importance of corporate income taxes as as state revenue source. Combined, these factors represent a significant lowering of the tax burden that is initially incident on business. This paper takes just one of these, the role of corporate income taxation, and seeks to investigate the extent to which the revenues have declined and some ways to reverse the pattern.

JEL Classification: H25

Suggested Citation

Fox, William F. and Luna, LeAnn, State Corporate Tax Revenue Trends: Causes and Possible Solutions. National Tax Journal, Vol. 55, No. 3, September 2002. Available at SSRN: https://ssrn.com/abstract=368127

William F. Fox (Contact Author)

University of Tennessee, Knoxville - College of Business Administration ( email )

453 Haslam Business Building
Knoxville, TN 37996
United States
865-974-5441 (Phone)
423-974-3100 (Fax)

LeAnn Luna

University of Tennessee, Knoxville - College of Business Administration - Center for Business and Economic Research ( email )

711 Stokely Management Center
Knoxville, TN 37996-4334
United States
865-974-6080 (Phone)
865-974-3100 (Fax)

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