Specifically, for every one percentage point increase in the corporate tax rate, employment in start-up firms declines 3.7 percent”. Decker of the Federal Reserve reported their findings that “increases in corporate tax rates have a statistically and economically significant negative effect on employment among start-up firms. ![]() Mark Curtis from Wake Forest University, and Ryan A. In a 2018 report “ Entrepreneurship and State Taxation”, Professor E. Corporate Tax Suppresses Entrepreneurship Corporations might be less inclined to implement new cost hikes due to the elimination of this expense. The elimination of corporate income tax would therefore represent a tax cut to individuals. Any cost levied to a business is ultimately passed on to the consumer. Those who balk at the idea of eliminating the corporate income tax would do well to remember that businesses don’t pay taxes people do. However, by attracting more businesses to the state, the tax base benefits from the massive additions to all the sales, property and personal income taxes that those jobs and businesses bring to Utah. Since Utah consistently has a surplus, particularly in the last several years, eliminating this tax entirely would have minimal impact on state revenues, budget and spending. Corporate taxes, represented in orange, have represented a small and decreasing fraction of the state’s tax revenues. The graph below shows how Utah’s tax system portfolio composition has changed over time. Note that despite a decrease in the tax rate between 20 of ten basis points, corporate tax revenues actually increased, suggesting advantages to a lower rate, though this rise can be attributed to many factors. In fact, this low revenue is an increase from historical norms in 2020, corporate tax revenues accounted for just 1.9% of the total budget, and in 2019, just 3.1%. ![]() In 2022, the corporate tax rate was 4.85%, and only accounted for around 6% of revenues collected by the Tax Commission in FY2022, and 3.6% of the state’s total budget. The table below, taken from the Utah State Tax Commission’s Annual Report shows the revenue generated by this tax from 2018-2022. How else could they be so rich? After debunking the myth that the wealthy do not pay sufficient taxes in our February newsletter, your Utah Taxpayers Association now suggests a break for businesses by eliminating the state corporate tax.Ĭorporate income taxes do not generate much revenue for the state. Everyone is convinced that neither of these groups are paying their fair share. When it comes to paying taxes, there are two villains: the 1-percenters, and businesses.
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