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1 Joseph Henchman, Location Matters and Connecticut 1 (2015)

handle is hein.taxfoundation/locmact0001 and id is 1 raw text is: Location Matters and Connecticut Joseph Henchman Vice President of State Projects, Tax Foundation Connecticut State Tax Panel September 16, 2015 Co-Chair Dyson, Co-Chair Nickerson, and members of the Panel: My name is Joseph Henchman, and I'm vice president for state projects at the Tax Foundation. I am pleased to appear before you again and reiterate our willingness to provide any materials or research you may find helpful as you evaluate Connecticut's tax system. In that spirit, I would like to share an analysis we recently released called Location Matters: The State Tax Costs of Doing Business. This major study calculates the total tax cost faced in each state by seven hypothetical businesses: a corporate headquarters, an R&D facility, a retail store, a capital-intensive manufacturer, a labor-intensive manufacturer, a call center, and a distribution center. Our economists developed profiles for each of these firms based on comparative data: so many square footage, so many employees, and so forth. We then worked with the audit, tax, and advisory firm KPMG LLP to calculate the tax bills for each of these firms in all 50 states. We included all applicable state and local taxes, including corporate income taxes, property taxes, sales taxes on business inputs, unemployment insurance taxes, and franchise taxes. We calculated the tax bill twice: once for a new firm eligible for available incentives, and once for a mature firm that generally cannot access such incentives. We used the tax code as it stood on April 1, 2014, the most recent date where we had all available data from all 50 states. It does not include federal taxes: just state and local taxes. Connecticut's results are attached to this testimony. A hypothetical corporate headquarters, for example, would pay a 19 percent effective tax rate to Connecticut, the 44th lowest (or 6th highest), beaten only by New Jersey, Washington state, Iowa, Minnesota, Pennsylvania, and New York. A hypothetical R&D facility would pay a 14 percent total tax rate, 42nd lowest (or 8th highest). Distribution centers, call centers, and retailers also would have relatively high tax bills in Connecticut. Manufacturing facilities, by contrast, face relatively lower tax bills.

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