I hope you don't have a heart attack when I inform you that Scott Walker has revealed yet another plan to push the state of Wisconsin closer to bankruptcy.
Sure, why not eliminate the corporate income tax? It is only the third largest source of revenue for the state and business is good, so why wouldn't we want to help it out?
Frankly, U.S. corporate income taxes probably are too high. Many countries with more developed welfare states have far lower corporate tax rates, and higher individual income tax rates. The logic follows that it is better to tax wealth than wealth production.
However, Walker's call to make Wisconsin the 6th state with no corporate taxes adds on to a long list of unfunded campaign promises. Although he grudgingly admits that some of the tax cuts might have to be phased in over time, he still has yet to explain how the state will manage cutting $1.6 billion in taxes to high income earners and still balance the budget next summer.
The five states with no corporate income tax are Texas, South Dakota, Nevada, Washington and Wyoming.
Most of these states derive a significant amount of their revenue from severance taxes on natural resources, such as oil and coal reserves. I'm not clear on Washington's tax system, however, I do know its alcohol tax is nine times higher and its sales tax is also slightly higher.
Most importantly, however, these are states with undeveloped services, including education. The Economist has pontificated ad nauseum about Texas' contradictions, such as its pro-business tax environment and its pathetic public education system, which deters business and high-income earners.