{"id":7839,"date":"2021-05-07T19:11:49","date_gmt":"2021-05-07T19:11:49","guid":{"rendered":"https:\/\/taxops.com\/?p=7839"},"modified":"2021-05-07T21:06:48","modified_gmt":"2021-05-07T21:06:48","slug":"tax-foundation-releases-location-matters-2021","status":"publish","type":"post","link":"https:\/\/taxops.com\/tax-foundation-releases-location-matters-2021\/","title":{"rendered":"Tax Foundation Releases &#8220;Location Matters 2021&#8221;"},"content":{"rendered":"\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em>The Tax Foundation, an independent tax policy nonprofit, released its comparison of corporate tax costs in all 50 states, demonstrating the real-world tax burden and truth facing all businesses&#8211;tax are not transparent. Now in its third edition, the study is used as a guide for forming and operating under evolving tax policies.  <\/em><\/p><\/blockquote>\n\n\n\n<div style=\"height:33px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Key Findings:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">According to the Tax Foundation, <em><a href=\"https:\/\/taxfoundation.org\/state-tax-costs-of-doing-business-2021\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Location Matters 2021\">Location Matters<\/a> <\/em>accounts for the tax complexity and the ways that tax structure affects competitiveness, as a tool for policymakers to explore the impact of tax provisions. The report of the real-world tax burden businesses operate under, now in its third edition, includes calculations of the real-world tax burden businesses operate under. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/taxfoundation.org\/state-tax-costs-of-doing-business-2021\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Location Matters 2021\">Key Findings<\/a>:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em><strong>Statutory tax rates only tell part of the story.<\/strong><\/em>&nbsp;While topline rates are important and high rates may provide \u201csticker shock\u201d for corporations considering locating within a given state, they are just one component of effective tax burdens. Tax incentives, apportionment, throwback rules, and other factors can have a dramatic impact on effective tax burdens. In some cases, states with low statutory tax rates can impose high effective tax burdens, and&nbsp;<em>vice versa<\/em>.<\/li><li><em><strong>Corporate income taxes are just one part of the corporate tax burden.&nbsp;<\/strong><\/em>Corporate income taxes only account for more than one-fifth the average corporate tax burden for five of the 16 new and mature iterations of the eight firm models. Sales, property, and unemployment insurance taxes are highly significant components of a firm\u2019s overall tax burden as well.<\/li><li><em><strong>Incentives disproportionately benefit new firms, often to the detriment of established operations.<\/strong><\/em>&nbsp;Because most tax incentives are developed to convince firms to relocate to, or increase hiring in, a given state, they disproportionately benefit new firms, often to the detriment of mature firms which experience higher tax burdens to subsidize these incentives. Businesses with longer time horizons may have cause to be wary of states which too substantially prioritize attracting new industries over maintaining modest rates for established operations.<\/li><li><em><strong>Incentive-heavy tax structures can undermine tax equity even among newly-established firms.<\/strong><\/em>&nbsp;While incentives overwhelmingly favor new firms over mature operations, they often discriminate among firm types as well, with the sort of incentives that favor one operation but do little or nothing to help another. As such, they tend to pick winners and losers and, while potentially making the state highly attractive to specific industries or firm profiles, can limit the state\u2019s broader economic appeal across diversified business types.<\/li><li><em><strong>Different firm types experience dramatically different effective tax rates.<\/strong><\/em>&nbsp;Both because different firm types will vary in their exposure to major state and local taxes\u2014distribution centers will be more sensitive to property taxes burdens, for instance, while retail establishments may be more significantly impacted by the sales tax\u2014and because of differential treatment of different firm types under the tax code, businesses can experience dramatically different effective tax rates. The median effective tax rate for new shared service centers (which rarely receive tax incentives) is 26.1 percent, while the median rate for highly favored new R&amp;D centers is 12.0 percent. The median rate for a mature labor-intensive manufacturing firm is 10.3 percent; the median mature distribution center, by contrast, experiences a 34.6 percent tax burden.<\/li><li><em><strong>The impact of corporate income and gross receipts taxes depends heavily on structure and firm type.<\/strong><\/em>&nbsp;Although gross receipts taxes generally have much lower statutory rates than traditional corporate income taxes, they are assessed on firms\u2019 total receipts (sometimes less certain subtractions), not just net income. Some firm types benefit from this structure, while others are penalized by it. The relative impact of these two approaches to business taxation for any given firm type can also depend heavily on how nexus or, in the case of corporate income taxes, apportionment is treated.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"705\" height=\"593\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021.png\" alt=\"Map of US with rankings for Mature Firms\" class=\"wp-image-7840 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021.png 705w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021-480x404.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 705px, 100vw\" \/><noscript><img decoding=\"async\" width=\"705\" height=\"593\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021.png\" alt=\"Map of US with rankings for Mature Firms\" class=\"wp-image-7840 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021.png 705w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021-480x404.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 705px, 100vw\" \/><\/noscript><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The&nbsp;<em>Location Matters&nbsp;<\/em>study, together with the Tax Foundation&#8217;s annual&nbsp;<a href=\"https:\/\/taxfoundation.org\/publications\/state-business-tax-climate-index\/\"><em>State Business Tax Climate Index<\/em><\/a>, provides tools to understand each state\u2019s business tax system and the burdens it imposes, offering a road map for improvement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Source: <a href=\"https:\/\/taxfoundation.org\/state-tax-costs-of-doing-business-2021\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Location Matters 2021\">Location Matters 2021<\/a>, Tax Foundation<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Get in Touch<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:49px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">More Tax News<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>\n\n\n<div style=\"height:46px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Tax Foundation, an independent tax policy nonprofit, released its comparison of corporate tax costs in all 50 states, demonstrating the real-world tax burden and truth facing all businesses&#8211;tax are not transparent. Now in its third edition, the study is used as a guide for forming and operating under evolving tax policies. Key Findings: According [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":7840,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[230,228,229,226],"tags":[715,33,716,173,717],"class_list":["post-7839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asc-740","category-federal-tax","category-state-and-local","category-tax-news","tag-corporate-income","tag-corporate-tax","tag-effective-tax-rate","tag-gross-receipts","tag-tax-structure"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/Tax-Foundation-Location-Matters-2021.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/7839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=7839"}],"version-history":[{"count":6,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/7839\/revisions"}],"predecessor-version":[{"id":7850,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/7839\/revisions\/7850"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/7840"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=7839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=7839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=7839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}