Considering the Relationship between Business Applications and State Tax Rank: Effect of Tax Cuts and Jobs Act of 2017

Authors

  • Benjamin B Boozer, Jr Jacksonville State University
  • John Sneed Jacksonville State University
  • Cindy Sneed Jacksonville State University

Keywords:

Business development, Taxes

Abstract

This research measures the relationship between state-level taxes and per capita business applications.  State-level taxes used in the analysis are based on tax rank of each state from 1 to 50, with lower number rank associated with lower tax burden for that category and higher number rank with higher tax burden for that category.  Tax categories used as independent variables in the model are the following: corporate tax rank, individual income tax rank, sales tax rank, property tax rank, and unemployment insurance tax rank. Five time periods were measured from 2015-2016, 2016-2017, 2017-2018, 2018-2019, and 2019-2020. The research question for the model considers how the 2017 Tax Cuts and Jobs Act (TCJA) legislation affects business applications within each state as measured through state-level variables.  Sales taxes are found to inversely affect business applications two years before TCJA passage and during the year of passage, but to have a positive relationship one year after passage. Income tax is positively correlated in that immediate year following passage, while corporate tax inversely impacts two years following passage. 

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Published

2021-12-26

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Section

ABR Journal Articles