MassBudget: How Business Taxes in MA Compare to Other States -- and Context
Massachusetts Budget and Policy Center
How Business Taxes in MA Compare to Other States-- and Context
A wide variety of factors influence where businesses locate and whether they thrive in a given state. These factors include the quality of a state's infrastructure, the skills of its workforce, the proximity to materials and customers, and the overall quality of life available to employees. Tax policy also plays a role, though not a primary one. This is not surprising given that state and local taxes account for as little as two percent of total business costs for the average corporation operating in the U.S. There is strong evidence that the most important factor influencing the strength of a state economy is the level of education of the workforce.
When comparing business taxes among the 50 states it is important to consider the entire tax system in each state. Some states collect more revenue from businesses through the property taxes (typically a local tax), while other states rely more heavily on corporate income taxes, gross receipts and excise taxes, or general sales taxes (typically state-level taxes). An apples-to-apples comparison of total business tax levels in different states therefore must account for all of the ways that state and local governments collect taxes from businesses. It should also account for the size of a state's economy.
The Council on State Taxation (COST) is a nonprofit trade association consisting of more than 600 multistate corporations engaged in interstate and international business that produces an annual report examining the taxation of businesses in each state. The report accounts for all state and local taxes and finds that Massachusetts is a relatively low tax state for business: business taxes as a percent of total state economic output (Gross State Product) are lower in Massachusetts than in 38 states and higher than just 11. MassBudget's fact sheet How Do Massachusetts Business Taxes Compare to Other States? examines the findings of this report and related data.
The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.
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Massachusetts Budget and Policy Center | 15 Court Square | Suite 700 | Boston | MA | 02108