Businesses in Delaware face different effective tax rates depending on their industry and how long they have been located in the state, according to a new report from the nonpartisan Tax Foundation in collaboration with KPMG, an audit, tax and advisory firm.
Tax Foundation economists created seven model firms in different industries and determined how the modeling would work for both new and mature firms, and KPMG tax specialists calculated the tax bill for those firms in each state.
So, how does Delaware compare to the rest of the country? Here are the state’s effective tax rates and rankings on each of the seven mature firms modeled:
- 23rd lowest rate on a corporate headquarters — at 13.3%
- 45th lowest rate on a research and development facility — at 15.4%
- 43rd lowest rate on an independent retail store — at 20.1%
- 21st lowest rate on a capital-intensive manufacturer — at 9.3%
- 26th lowest rate on a labor-intensive manufacturer — at 9.2%
- 32nd lowest rate on a call center — at 21.3%
- 30th lowest rate on a distribution center — at 28.5%
The study’s key findings include:
- States with low statutory tax rates can still impose high effective tax burdens due to factor such as tax incentive, apportionment, and throwback rules.
- Corporate income taxes are just one part of a business’s tax burden. Sales, property, and unemployment insurance taxes can also impose significant burdens on businesses.
- Tax incentives chiefly benefit new firms, often to the disadvantage of established operations.
- Different firm types experience dramatically different effective tax rates.
- The impact of corporate income and gross receipts taxes depends heavily on structure and firm type.
For the full report, visit: http://taxfoundation.org/location-matters/