Business

Governors urge corporate tax cuts

MIAMI — Governors from Florida to Arizona are proposing lower corporate taxes to create jobs.

Florida Republican Gov. Rick Scott said in an interview that company breaks are part of $1 billion in tax cuts in his 2012 budget. New York's Andrew Cuomo, Georgia's Nathan Deal, South Carolina's Nikki Haley, Arizona's Jan Brewer and Michigan's Rick Snyder have similar ideas.

"There's been a wave of proposals to cut corporate taxes as a means of stimulating economic growth," Michael Mazerov, senior fellow at the Washington-based Center on Budget and Policy Priorities, said. Gains will be "very modest and only occur in the very, very long run."

Cutting total state and local business taxes by 10 percent may bring only a 2 percent to 3 percent long-term increase in employment and growth for a state, Mazerov said in an earlier research paper.

The benefits are likely to be even more limited because income levies typically account for less than 10 percent of businesses' total state and local tax contribution, said Mazerov's paper for the nonprofit research group, which focuses on issues affecting low- and moderate-income families.

Scott, elected in November, said lower company taxes would create employment in Florida, whose 12 percent jobless rate in December was the third-highest among states, after Nevada and California. Sixteen states had higher unemployment last month than the 9.4 percent national rate in January.

"If I phase out the business tax, there will be no reason that somebody will want to open up their business in another state," Scott said in Washington on Saturday.

New York's Cuomo, a Democrat who took office this month, proposed in his campaign a $3,000 tax credit for companies hiring unemployed workers. Republican state lawmakers this month approved an additional $5,000 credit over three years for any new hiring.

The Republicans, going beyond Cuomo's agenda, would also eliminate the corporate franchise tax over two years for businesses with 50 employees or fewer and no more than $2 million of profit.

Georgia Republican Deal advocated in his campaign to reduce the corporate-income tax rate to 4 percent from 6 percent. A bipartisan panel this month proposed that the lower rate be funded by sales taxes on items such as food and cigarettes.

South Carolina Republican Haley, elected in November, promised to eliminate the state's corporate-income tax, which generates $260 million annually.

Arizona's Brewer, a Republican, suggested in her policy agenda released Jan. 18 reducing the corporate-income tax rate to a regional average of "just below 5 percent" from almost 7 percent. Michigan's Snyder, a Republican, proposed in his first state of the state address on Jan. 19 replacing the "job killing" business-income levy with a flat 6 percent corporate net-income tax.

All but five states — Nevada, South Dakota, Texas, Washington and Wyoming — have corporate-income taxes, according to the Tax Foundation.

  Comments