Shaping Policies. Creating Opportunities.

What Drives Business Growth? Lots of things….but not really corporate tax rates

State lawmakers are considering several proposals to eliminate Missouri’s corporate income tax, under the mistaken assumption that doing so would incentivize business growth or attract new businesses to Missouri. But evidence shows that there is little to no correlation between corporate tax rates and business location decisions.

In fact, in a recent survey of corporate executives and location consultants, access to major markets and availability of skilled labor were ranked as the top influencers of corporate location and expansion decisions. Tax rates didn’t even make the top five list.

Beyond the survey is real life evidence:

  • Missouri’s corporate income tax is already at the bottom of the nation – only one state has a corporate income tax rate that is lower than Missouri’s rate of 4%.
  • If corporate tax rates were a primary concern of businesses, Missouri would already be overflowing with business growth – we’d have businesses knocking down our doors to enter the state.

But they aren’t – and that’s because businesses consider a variety of factors when making expansion and location decisions.

  • Factors like trained labor, the size of the customer base, and access to transportation hubs all matter to businesses to a much higher degree than state taxes.
  • Further, business growth is increasingly in the entrepreneurial sector, founded by individuals who can often locate anywhere. For these folks, aspects of the quality of life in a state mean much more than the corporate income tax rate.

And all of those things – skilled labor, transportation, and quality of life – depend on state revenue and public services to support them.

Through the state’s education and highway infrastructures, our park systems, and services that nurture safe and healthy communities, we create an environment where workers and families want to live and where companies can grow to meet the natural demand of a thriving community.

Eliminating the corporate income tax would take a big bite out of the state’s ability to provide those basic public services and damage our ability to attract and retain businesses and jobs.

  • In context, eliminating the corporate income tax would cost more than $700 million per year – three-fourths of the total amount of funding Missouri contributes to higher education, four-year colleges and universities, two-year community colleges and technical schools, each year.

Rather than eliminate the corporate income tax, Missouri would do better using the revenue to invest in its workers and communities. The bills under consideration include Senate Bills 93 and 135, House Bills 660 and 816.

About the Author

Leave a Reply


Verified by MonsterInsights