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The impact of state personal and corporate tax rates on firm location

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  • Mark Gius
  • Phillip Frese

Abstract

The present study attempts to determine the effect of state personal and corporate tax rates on firm location at the 2-digit SIC level. Using a random effects model on a data set of 14000 observations, the present study finds that a state's personal tax rate has a negative effect on firm location but that a state's corporate tax rate has no statistically-significant effect on firm location. These results suggest that the locational decision of a firm is affected more by the impact that high personal taxes will have on the manager's and/or owner's income than by the negative impact of high corporate tax rates on firm profits.

Suggested Citation

  • Mark Gius & Phillip Frese, 2002. "The impact of state personal and corporate tax rates on firm location," Applied Economics Letters, Taylor & Francis Journals, vol. 9(1), pages 47-49.
  • Handle: RePEc:taf:apeclt:v:9:y:2002:i:1:p:47-49
    DOI: 10.1080/13504850110046859
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    Cited by:

    1. Shelley M. Kimelberg & Elizabeth Williams, 2013. "Evaluating the Importance of Business Location Factors: The Influence of Facility Type," Growth and Change, Wiley Blackwell, vol. 44(1), pages 92-117, March.
    2. Charisia Vlachou & Olga Iakovidou, 2015. "The Evolution Of Studies On Business Location Factors," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 20(04), pages 1-23, December.
    3. Mark Rider, 2006. "The Effect of Personal Income Tax Rates on Individual and Business Decisions - A Review of the Evidence," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0615, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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