State Tax Simulator

Tax Policy Simulator

Alabama Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Corporate income tax Investment tax credit on equipment and structure Investment tax credit on research and development Reset
Change in rate (percentage points)…p.p.
Change in rate (percentage points)…p.p.
Change in rate (percentage points)…p.p.
Capital’s factor share in production – E&S…%
Capital’s factor share in production – R&D…%
Price Elasticity of demand for output…
Elasticity of substitution between Capital and other factors of production, E&S…
Elasticity of substitution between Capital and other factors of production, R&D…
Slope of the Tax Reaction Function – CIT…
Slope of the Tax Reaction Function – ITC on E&S…
Slope of the Tax Reaction Function – ITC on R&D…
Multiplier effect on output…

Predicted Effects

User Cost — Equipment and Structures:
User Cost — Research and Development:
Equipment and Structures Capital Stock:
Research and Development Capital Stock:
Real State Output (GDP):
User Cost — Equipment and Structures:
Equipment and Structures Capital Stock:
Real State Output (GDP):
User Cost — Research and Development:
Research and Development Capital Stock:
Real State Output (GDP):

This State Tax Simulator applet predicts, for any given state, the economic effects of a change in corporate tax policy. The three corporate tax policies considered are the corporate income tax rate, the investment (equipment & structures) tax credit rate, and the research and development tax credit rate. The Simulator’s predicted effects are based on the data and model described in Chirinko and Wilson (2010). The applet allows users to choose the state of interest, the tax policy of interest, and the magnitude of the tax policy change. Users may also choose alternative values for the structural economic parameters that govern the economic relationships in the Chirinko-Wilson model.

Interactive State Tax Charts

Maps of current tax policies

  • Inv. Tax Credit
  • Corp. Income Tax
  • Capital’s Apportionment Wgt.

investment (equipment & structures) tax credit — A credit against the corporate income tax. The amount of the credit is typically a percentage of the capital investment (sometimes above a base threshold) that the corporation does within the state.

corporate income tax — A tax on corporate income. All but four states have a corporate income tax or a similar business tax such as a franchise tax, though some states exempt certain sources of income, such as interest income, from taxation.

capital (property) apportionment weight — The weight assigned to property in a state’s formula for apportioning a corporation’s national (federal) income to that state. Each state can choose this formula independently of other states. Historically, nearly every state apportioned a corporation’s national income based on an equally-weighted average of the shares of the corporation’s sales, payroll, and property that are located in the state. Over the past four decades, however, states have increasingly lowered the weights on payroll and property (and increased the weight on sales) in this average as a means to incentivize job creation and capital investment in their state. For this reason, the lowering of the property apportionment weight can be considered an investment tax incentive similar to raising an investment tax credit or lowering the corporate income tax rate.

Animation of tax policy changes over time and states

  • Inv. Tax Credit
  • Corp. Income Tax
  • Capital’s Apportionment Wgt.

In 1969, New York became the first state to enact an investment tax credit (ITC). But as this animation shows, states increasingly enacted ITCs in the forty years since, and also continually upped the ITC rate. (See Chirinko & Wilson, 2007 NTA Proceedings for more detail.) Scroll over any bar in any year to see that state’s tax rate in that year. (States are arranged alphabetically.)

This animation shows that nearly all states have changed their corporate income tax rate a number of times over the past forty years. There was a general upward trend in rates from 1969 to the early 1990s, followed by a modest downward trend since then. (See Chirinko & Wilson, 2007 NTA Proceedings for more detail.) Scroll over any bar in any year to see that state’s tax rate in that year. (States are arranged alphabetically.)

In 1963, Iowa was the only state with a corporate income tax that did not have equal weights on sales, payroll, and capital (property) in its formula for apportioning a corporation’s national income to that state; Iowa had a 100% weight on sales. Starting in the 1970s, as this animation shows, more and more states moved to a lower weight on capital (and payroll, not shown) as a way to encourage businesses to locate their capital and employment in their state. (See Chirinko & Wilson, FRBSF WP 2008-03 for a discussion of this trend.) Scroll over any bar in any year to see that state’s capital apportionment weight in that year. (States are arranged alphabetically.)

Counts and averages over time

  • Inv. Tax Credit
  • R&D Tax Credit
  • Jobs Tax Credit
  • Avg. Tax

Source: Chirinko and Wilson (2008, Journal of Public Economics)

Source: Wilson (2009, Review of Economics and Statistics)

Source: Preliminary analysis by Robert Chirinko and Daniel Wilson

Source: Chirinko and Wilson (2007, State Tax Notes)