A number of states across the country are dropping their corporate tax rates on July 1, in a bid to jump start job growth, USA Today reported
The moves by governors and legislators come in the context of the country's overall improvement in economic outlook, allowing states to expect an increase in tax revenues. At the same time, competition has increased among states to attract business.
"In 2010, we really saw a lot of tax and fee increases to bring revenues into cash-strapped state coffers," Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers, told USA Today.
"This year was the first year (since then) governors actually proposed tax and fee decreases. We've definitely seen a movement to try to reduce taxes and fees and encourage job growth."
Indiana will drop its corporate tax rate from 7.5 percent to 7 percent while Rhode Island will cut business rates from 9 percent to 7 percent. In Idaho, sales taxes will be waived for software purchased through the "cloud," and Maryland is increasing tax credits for cybersecurity, biotechnology, and research and development in a bid to attract companies to relocate.
"The economy's only going to get better if we have businesses creating jobs. One of the biggest problems they've had is access to capital," Raymond Gallison, chair of the Rhode Island House Committee on Finance, told USA Today, adding that tax relief will help give businesses the necessary access to financing.
Consumers are also in line to get some tax relief. Connecticut is eliminating sales tax on nonprescription drugs, and in Florida, youth bicycle helmets, car seats, and booster seats will no longer be taxed.
California is decreasing its gas tax by 3.5 percent, and Arkansas farmers will see a decrease in certain sales taxes related to agriculture and energy.
There are those, however, who argue that the tax cuts will do little to improve state economies or attract companies to relocate from other states, USA Today reported.
"There's always this cycle, when revenues start coming back a little bit, you start to see legislatures using some of the revenue to cut taxes. And it's unfortunate, because revenues are just finally back to where they were, pre-recession, after adjusting for inflation," Michael Mazerov of the Center for Budget and Policy Priorities, a research group focused on low-income families, told USA Today.
© 2016 Newsmax. All rights reserved.