The Exportation of State and Local Taxes in a Multilateral Framework: The Case of Business Type Taxes

This paper analyzes the short-run interstate exportation and importation of state corporate income taxes and property taxes accounted for by all business sectors in each state of the United States. A multilateral approach is applied which particularly demonstrates how both tax importation and exportation result through federal income tax offsets. Gross and net exportation of business taxes are considerably greater in percentage terms and in absolute dollars than estimates for household taxes. Twentythree states which successfully export one group of taxes are net importers of the other. Consequently, any assessment of interstate tax exportation which focusses on particular taxes or products can be quite misleading.