Do Limited Liability Companies Explain Declining State Corporate Tax Revenues?

William Fox and LeAnn Luna
Additional contact information
LeAnn Luna: University of Tennessee

Public Finance Review, 2005, vol. 33, issue 6, 690-720

Abstract: The effective state corporate tax rate fell significantly during the past fifteen years despite the very robust growth in corporate book profits. This article examines the causes of the decline with a focus on the effects of the relatively new option of forming limited liability companies (LLCs), state tax policy, and changes in the federal base. The effects are estimated using a simultaneous equation model and a twelve-year panel for U.S. states. The results confirm that the advent and growth of LLCs have been important causes of the decline in corporate tax revenues. In addition, changes in the federal corporate tax base, the propensity of states to grant tax incentives, and the failure of states to require combined reporting have been significant factors in falling corporate tax revenues.

Keywords: state income tax; corporate; tax planning; organizational form (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142105279333 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:33:y:2005:i:6:p:690-720

DOI: 10.1177/1091142105279333

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().