States could cut taxes significantly if they eliminated corporate welfare.Matthew Mitchell and Tamara Winter have calculated the cost of corporate welfare in terms of tax cuts forgone for each state. Here are the highlights:
Several states, including Missouri and New York, could reduce their corporate tax rates by more than 90 percent if policymakers eliminated corporate incentives. Michigan, Nebraska, and Oklahoma could completely eliminate corporate taxation and still have room for cuts in other taxes if they eliminated all corporate incentives.
Lawmakers in Louisiana, Michigan, and Nebraska could reduce their states’ personal income tax rates by 14.2, 10.8, and 16.2 percent, respectively, if they eliminated corporate incentives. […]
Taxpayers in Nebraska could enjoy a 23.2 percent reduction in their sales tax rate if state lawmakers eliminated corporate incentives. Similarly, if lawmakers in New York eliminated corporate incentives, they could reduce the state sales tax rate by 34.1 percent. More dramatically, Michigan state lawmakers could reduce their state sales tax rate by 49.3 percent in the absence of corporate incentives.
If Nebraska state policymakers eliminated corporate incentives, they could reduce total taxation by 8.43 percent. Similarly, Michigan and New York could reduce total taxation by 7.67 percent and 6.5 percent, respectively.
[Matthew D. Mitchell and Tamara Winter, “The Opportunity Cost of Corporate Welfare,” Mercatus Center, May 22]
