Where Should Your Company Relocate or Invest?
If your company is, or has been looking to relocate or invest in new operations and is not sure where to begin, then you may find the recent study put together by the Council On State Taxation (COST) and Ernst & Young, LLP extremely informative.
The study provides a state-by-state comparison of the tax liabilities that new investments in selected industries or types of economic activities would incur in each state. The analysis focuses on capital investments in industries that have location choices, such as factories or headquarters, rather than those that are tied to a specific geography, such as retailers or hotels.
The study reflects a large difference in tax burdens among the states. Key findings include:
- Maine imposes the smallest burden on new investment due to factors such as a favorable corporate income apportionment formula that compensates for a relatively high tax rate, a property tax exemption for new equipment and low state and local sales tax rates.
- Oregon ranks second due to an advantageous corporate income apportionment formula and the absence of a sales tax on business inputs and franchise taxes.
- New Mexico’s state and local business tax system imposes the greatest burden of any state, resulting from factors such as a corporate income apportionment system that makes a large portion of the income from new investments taxable, an above average corporate tax rate and the imposition of a gross receipts tax on virtually all business activities.
You can review the study here.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.