This paper examines the effect of the formulary apportionment system on state‐level economic development. All three apportionment factors, when combined with the corporate tax rate employed by each state, are shown to have a significant negative association with the percentage change in manufacturing employment. However, further analysis suggests that the corporate tax rate, and not the apportionment formula, may be driving employment growth. Also, the findings do not support the importance of the throwback rule or the recent trend to overweight the sales factor in attracting economic development to a state.
The Effect of the Formulary Apportionment System on State‐Level Economic Development and Multijurisdictional Tax Planning
Teresa Lightner; The Effect of the Formulary Apportionment System on State‐Level Economic Development and Multijurisdictional Tax Planning. Journal of the American Taxation Association 1 January 1999; 21 (s-1): 42–57. https://doi.org/10.2308/jata.1999.21.s-1.42
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