Many people are beginning to wrap their minds around the House Republicans’ proposed destination-based cash-flow tax and what it means for tax reform. Most people are still looking into the tax’s impacts on trade and how...
- Tax Foundation Testifies on Corporate Tax Cut in Maryland
Tax Foundation Testifies on Corporate Tax Cut in Maryland
Lower Rate Could Lead to Greater Economic Growth
Washington, D.C., February 26, 2013—Tax Foundation economist Elizabeth Malm will testify today on the proposal to cut the corporate income tax rate in the State of Maryland. Malm's testimony before the House of Delegates' Ways and Means Committee will focus on the need for the state to be competitive with its neighbors in attracting jobs and investment and the positive economic benefits associated with a lower corporate tax rate.
- Maryland House Bill 261 would reduce Maryland’s state corporate income tax rate from 8.25 percent to 6 percent.
- Maryland’s corporate income tax rate is currently the 15th highest nationally and the third highest in the region.
- Virginia’s corporate rate is only 6 percent—more than two percentage points lower than Maryland’s. Reducing the corporate rate would make Maryland more competitive in relation to its neighbors.
- Tax structure and economic growth are inextricably linked. According to academic studies, corporate income taxes are the most detrimental tax to economic growth.
- Corporate income tax revenues grow at a significantly slower rate than the overall economy. If tax revenues are unable keep pace with spending demands, states must raise rates, move to other sources of revenue, or reduce spending.
- Corporate income tax revenue has been shown to be the most volatile of all tax revenue sources. Though corporate income tax revenues are plentiful in economic booms, they contract severely when the economy dips, leading to revenue shortfalls and the need to make up revenues elsewhere.
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or firstname.lastname@example.org.
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