Corporate Tax Reform: Taxing Profits in the 21st Century

State Corporate TaxesMaking a Bad Situation Worse

At the federal level, the corporate tax is our most complex and economi-cally damaging tax. State corporation taxes take this bad situation and make it worse. To collect their corporate tax, each state starts with the federal corporate tax and then makes adjustments and modifications to meet its own set of policy and revenue objectives. Then each must engage in the always contentious fight with corporations about what share of national profits falls inside its jurisdiction. For all this aggravation—for all this fingernail-scratching-on-the-blackboard pain—the states collectively never raise more ...