How should a Subnational Corporate Income Tax on Multistate Businesses be Structured?(Forum: State Corporate Income Taxes‪)‬

INTRODUCTION Declining corporate income taxes as a share of total state tax revenues since the late 1980s, combined with a perception on the part of some that tax planning is growing rapidly and excessively (Fox and Luna, 2002), has refocused attention on the state corporate income tax (CIT). The attention is a little surprising since the tax provides only about nine percent of total business tax revenue and is dwarfed by business property and sales tax payments (Cline et al., 2003), but the corporate income tax has to some extent (and perhaps unfairly) become a lightening rod for concerns about tax planning and corporate abuses. The result is that more than 15 states considered significant corporate tax reform in 2004 alone, making now a propitious time to reconsider the elements of a good CIT system.