As my colleague Elizabeth McNichol explained last week, policymakers in Louisiana, Nebraska, and North Carolina have proposed eliminating their states’ income tax and raising the sales tax to make up the lost revenue. Those plans won’t produce fairer tax systems or more “business friendly” environments, but that hasn’t stopped advocates in those states from pushing to eliminate the corporate income tax on top of repealing the personal income tax. Now, officials in Florida, New Mexico, and Missouri have offered their own proposals to cut corporate income taxes.
Proponents of the plans say they’ll stimulate the economy and create jobs. This idea isn’t new — but it still won’t work. As I wrote a few years ago when some policymakers made similar proposals, the plans won’t likely deliver on those promises, and they’ll also drain state budgets of revenues needed to fund public services, including services essential to long-term economic growth like education, infrastructure, health care, and public safety.
Here are four reasons why the plans won’t work: