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The impact of state personal and corporate tax rates on firm location

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  • Mark Gius
  • Phillip Frese

Abstract

The present study attempts to determine the effect of state personal and corporate tax rates on firm location at the 2-digit SIC level. Using a random effects model on a data set of 14000 observations, the present study finds that a state's personal tax rate has a negative effect on firm location but that a state's corporate tax rate has no statistically-significant effect on firm location. These results suggest that the locational decision of a firm is affected more by the impact that high personal taxes will have on the manager's and/or owner's income than by the negative impact of high corporate tax rates on firm profits.

Suggested Citation

  • Mark Gius & Phillip Frese, 2002. "The impact of state personal and corporate tax rates on firm location," Applied Economics Letters, Taylor & Francis Journals, vol. 9(1), pages 47-49.
    • Handle: RePEc:taf:apeclt:v:9:y:2002:i:1:p:47-49
    DOI: 10.1080/13504850110046859
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    Cited by:

    1. Teresa D. Harrison, 2008. "Taxes and Agglomeration Economies: How Are They Related to Nonprofit Firm Location?," Southern Economic Journal, John Wiley & Sons, vol. 75(2), pages 538-557, August.
    2. Shelley M. Kimelberg & Elizabeth Williams, 2013. "Evaluating the Importance of Business Location Factors: The Influence of Facility Type," Growth and Change, Wiley Blackwell, vol. 44(1), pages 92-117, March.
    3. Eichfelder, Sebastian & Kluska, Mike & Knaisch, Jonas & Selle, Juliane, 2021. "Senkung der Unternehmenssteuerlast versus Förderung von Investitionen: Was ist die bessere Strategie zur Förderung der Standortattraktivität Deutschlands?," arqus Discussion Papers in Quantitative Tax Research 263, arqus - Arbeitskreis Quantitative Steuerlehre.
    4. Mark Rider, 2006. "The Effect of Personal Income Tax Rates on Individual and Business Decisions - A Review of the Evidence," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0615, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Charisia Vlachou & Olga Iakovidou, 2015. "The Evolution Of Studies On Business Location Factors," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 20(04), pages 1-23, December.
    6. Eichfelder, Sebastian & Kluska, Mike & Knaisch, Jonas & Selle, Juliane, 2021. "Senkung der Unternehmenssteuerlast versus Förderung von Investitionen: Was ist die bessere Strategie zur Förderung der Standortattraktivität Deutschlands?," arqus Discussion Papers in Quantitative Tax Research 266, arqus - Arbeitskreis Quantitative Steuerlehre.

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