Policy Documents

The Leaflet - States Must Cut Corporate Taxes...Or Get Left Behind

February 20, 2014

States Must Cut Corporate Income Taxes...Or Get Left Behind

The U.S. has the highest corporate income tax rates in the developed world when you combine the federal and state tax rates. This creates an environment that deters both large corporate investment and small business entrepreneurs. A working paper on taxes and economic growth by the Organization for Economic Cooperation and Development found corporate taxes to be the onesmost harmful to economic growth.
 
Some states are learning from their own mistakes when it comes to corporate tax policy. As part of an $18 billion (and counting) tax increase package, the state of Illinois increased its corporate income tax rate from 4.8 percent – 21st highest overall corporate tax rate in the country – to 9.5 percent – 4th highest, according to the nonpartisan Tax Foundation. Since the tax increase took effect the state has been losing businesses and failing to lure new ones.
 
Illinois Speaker Michael Madigan proposed a plan last month to cut Illinois’ corporate income tax in half to 3.5 percent. “For many years, we have listened to employers about the best manner to improve the business climate,” Madigan said in a statement, “cutting the corporate income tax rate is another step I am asking the legislature to consider.” If put into effect, this proposal would improve the business climate of Illinois and offer a lesson for other states considering changes to their corporate tax structure.
 
Corporate income taxes greatly affect a country’s or state’s ability to be competitive for business investment – not only with other states, but with countries around the world.

Budget & Tax 

House Speaker Michael Madigan recently proposed cutting Illinois’ corporate income tax to 3.5 percent, below the 2011 level. A press release from Madigan’s office stated the tax cut would save Illinois businesses $500 million to $700 million in Fiscal Year 2014 and up to $1.5 billion in Fiscal Year 2015. In this Research & Commentary, Senior Policy Analyst Matthew Glans argues that while Madigan’s corporate income tax cuts would be a step in the right direction, lawmakers could go even further. Read More

Health Care
 
In this new Policy Brief, Heartland Senior Fellow Peter Ferrara describes two opposing approaches to addressing the Medicare crisis. Obamacare, he notes, attempts to address the problem by “cut[ting] Medicare by $716 billion over the next 10 years alone, mostly by slashing Medicare payments to doctors and hospitals.” Those Medicare cuts total $5 trillion over the next 20 years, he notes. The far better alternative, says Ferrara, is the Medicare reform plan proposed by House Budget Committee Chairman Paul Ryan (R-WI). Ferrara explains how the Ryan reforms would help not only seniors, but taxpayers as well. Read More
 
Telecom
 
Jon Street of Vermont Watchdog examines the failure of a municipal telecommunications system in Burlington, Vermont. Street examines how the city is asking taxpayers for $10.5 million in new funding for the barely utilized system after already spending nearly $50 million. Read More
 
Education
 
Research Fellow Joy Pullmann responds to a public campaign against teacher unions that blames them and their political allies for the devastating lack of progress in inner-city public schools by arguing the lack of parental unions in such areas is also fair game. Citing studies that show students with married parents achieve greater success, Pullmann says it’s unfair not to acknowledge the lack of stable families when discussing who’s to blame for the plight of inner-city public schools. Read More

The United Nations is calling for greater spending on global warming mitigation during a time when current estimated spending levels on those efforts are dwarfing the U.N.’s own estimated cost for ending world hunger. Policy Analyst Taylor Smith goes on to explore how this, and other policies that revolve around picking winners and losers, causes more harm than good. Read More

From Our Free-Market Friends
 
Every day there seems to be a new viral “health scare” sensation that causes panicked consumers to think the next trip to the grocery store, or even out of their front door, could be their last. Many of these scare pieces are not based on facts, and this can lead to adverse effects. The American Council on Science and Health (ACSH) debunks the myths surrounding 13 of the most popular “health scares” of 2013. Read More


The February issue of Budget & Tax News reports on the approval of the first federal budget since 2009, noting it received a lukewarm response even from many supporters and outright opposition from many groups on the political left and right. “In two words: Ho Hum,” said John Makin, a resident scholar at the American Enterprise Institute.

Environment & Climate News

School Reform News