Taxes on businesses have little to do with economic development, another study shows. The Atlantic’s Richard Florida explains a new study, “Competitiveness of State and Local Business Taxes on New Investment: Ranking States by Tax Burden on New Investment,” a collaboration between the Council on State Taxation (COST) and Ernst & Young,which ranks the 50 states according to a business tax competitiveness index.
The bottom line is this: Lower state investment tax burdens aren’t associated with stronger state economies, and higher investment tax burdens aren’t associated with worse ones. Tax cuts may be an effective political strategy and lowering business and investment taxes may appeal to corporate interests and attract campaign contributions, but they have little relation to state economies.