There is an article in the January 2007 issue of CFO magazine that caught my attention this week. It deals with State And Local Taxation (S.A.L.T.) departments making an attempt to get money back from businesses that are drawn to their state by generous tax breaks offered by another governmental department, economic development. In most cases, when and individual begins research on starting a new business, they look for a state that offers tax breaks, economic development funds to start the business in underdeveloped areas, or both. What seems to be happening these days is the state revenue departments are finding other ways to take back the incentives given by the economic development departments.
Many of the states strategies include, beefing up their audits of businesses, passing new “creative” tax laws, and stricter enforcement of the laws surrounding the economic incentives. These actions however contradict the efforts of the economic development departments of the states so there is a conflict within the state. The goal seems to be that states want businesses to open up shop in their state but at the same time they want the tax revenue they will bring. Once the revenue department and the economic development department reach a compromise, the gap between the two can be shorten. By proactively working together on economic development projects, each side can benefit. This way less SALT will be thrown into the strategy of the business looking to move into a state.
For more information regarding the best states to open a business in be sure to check out the following website:
Keeping your Business N Synergy (will less salt)
Brian N. Stovall