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

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  • Gupta, Sanjay
  • Moore, Jared
  • Gramlich, Jeffrey
  • Hofmann, Mary Ann

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.

Suggested Citation

  • Gupta, Sanjay & Moore, Jared & Gramlich, Jeffrey & Hofmann, Mary Ann, 2009. "Empirical Evidence on the Revenue Effects of State Corporate Income Tax Policies," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(2), pages 237-267, June.
    • Handle: RePEc:ntj:journl:v:62:y:2009:i:2:p:237-67
    DOI: 10.17310/ntj.2009.2.03
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    Cited by:

    1. Lampenius, Niklas & Shevlin, Terry & Stenzel, Arthur, 2021. "Measuring corporate tax rate and tax base avoidance of U.S. Domestic and U.S. multinational firms," Journal of Accounting and Economics, Elsevier, vol. 72(1).
    2. Igor Goncharov & Martin Jacob, 2014. "Why Do Countries Mandate Accrual Accounting for Tax Purposes?," Journal of Accounting Research, Wiley Blackwell, vol. 52(5), pages 1127-1163, December.
    3. Wei Han, 2020. "The analysis on Chinese e-commerce tax losses based on the perspective of information asymmetry," Electronic Commerce Research, Springer, vol. 20(3), pages 651-677, September.
    4. Preetika Joshi & Edmund Outslay & Anh Persson & Terry Shevlin & Aruhn Venkat, 2020. "Does Public Country‐by‐Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 2357-2397, December.
    5. Filipa Jesus & José Amorim & Catarina Cepeda, 2024. "Corporate Income Taxation Dynamics: A Comparative Analysis of Portugal, Germany, Belgium, The Netherlands, and Luxembourg," JRFM, MDPI, vol. 17(6), pages 1-17, June.
    6. Welsch, Anthony, 2023. "The effect of market-based sourcing on labor outcomes," Journal of Public Economics, Elsevier, vol. 225(C).

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