State Taxes Influence Business, Political Decisions Nationwide
State taxes, the less popular news target than oft-cited federal taxes, often shape business and political decision-making that stretches beyond a single state. Tax considerations affect which companies do business where and even where taxpayers choose to live. Recently, Georgia Governor Nathan Deal vetoed a “‘religious liberty’ bill intended to give legal shelter to opponents of same-sex marriage” after protests from national companies doing business in the state, such as Coca-Cola.[1] Passage of the bill could have effectively crippled Georgia’s economy, all because of tax incentives. Georgia offers some of the most generous tax credits for the movie and television industry in the nation, generating about $6 billion in business, and many entertainment companies were among those to join in the protest. Interestingly, large investments by religious conservatives in Georgia’s burgeoning movie and television boom would have been negatively impacted had entertainment companies fled Georgia.
Over in New Jersey, the state faces a huge reduction in tax revenue due to a high-net-worth taxpayer and longtime New Jersey resident, David Tepper, leaving the state.[2] Mr. Tepper moved his business and his home to Florida, potentially costing New Jersey hundreds of millions of dollars in lost taxes. Its personal income tax brackets top out at 8.97 percent – and Florida has no personal income tax.
As the New York Times reports, states have gone so far as to lobby large taxpayers to stay in-state or continue to visit to preserve the income stream of state taxes.[3] Also, stock IPOs or other taxable events have caused major spikes or drops in state revenue streams. Are states too dependent on major business and individual taxpayers for revenue? The veto in Georgia shows that many states could be willing to reshape legislative policy so they don’t have to find out.
— By Julia Damron, Esq., Barnes Law
Julia Damron is an associate attorney with Barnes Law, licensed to practice law in California.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] Galloway, Jim, “How Georgia’s film industry has muddled GOP battle lines over ‘religious liberty’”, March 30, 2016, AJC.com Politics Blog, http://politics.blog.ajc.com/2016/03/30/how-georgias-film-industry-has-muddled-gop-battle-lines-over-religious-liberty/.
[2] Frank, Robert, “One Top Taxpayer Moved, and New Jersey Shuddered”, New York Times, April 30, 2016, http://www.nytimes.com/2016/05/01/business/one-top-taxpayer-moved-and-new-jersey-shuddered.html?_r=0.
[3] Id.