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.