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November 26, 2007
States "Leak" $14.5 Billion in Corporate Revenue
Falls Church, VA – States are 22 percent less efficient than the federal government in collecting corporate taxes, translating into a total $14.5 billion shortfall in 2006 alone, State Tax Notes has found.

The $14.5 billion represents what states lose due to exclusions, deductions, credits, and planning opportunities beyond what the federal tax system offers to corporations. That is, the federal government would collect that much more than the states do if it applied state corporate tax rates to the federal corporate tax system.

“If states plugged those leaks so that their tax bases were as broad and tax avoidance opportunities as few as exist at the federal level, they could significantly reduce their corporate tax rates without any loss of revenue,” Martin A. Sullivan, who conducted the analysis, writes in today’s State Tax Notes.

Moreover, the problem of states losing revenues due to excessive write-offs is getting worse, according to Sullivan, who is a contributing editor to Tax Analysts, the parent company of State Tax Notes.

He proposes that states reform their corporate tax systems in ways that would maintain current revenues while scaling back writes-offs, enabling states to cut corporate income tax rates without losing revenue.

To read Sullivan’s article, go to the Tax Analysts home page. To interview Martin Sullivan, e-mail Wendy Lewis or call 703 533-4404.

About Tax Analysts

Tax Analysts is an influential provider of tax news and analysis for the global community. Over 150,000 tax professionals in law and accounting firms, corporations, and government agencies rely on Tax Analysts' federal, state, and international content daily. Key products include Tax Notes, Tax Notes Today, State Tax Notes, State Tax Today, Tax Notes International, and Worldwide Tax Daily. Founded in 1970 as a nonprofit organization, Tax Analysts has the industry's largest tax-dedicated correspondent staff, with more than 250 domestic and international correspondents. For more information, visit our home page.