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Income, Franchise, Sales, and Property Taxes: Effects on Business
Question Originally Asked Here:
Taxation: A Decisive Factor in Location Selection
Of the "big four" taxes, which have the most effect on which investments?
 

Amy Gerber, Executive Vice President, Jones Lang LaSalle
While all investments are subject to the "big four" taxes, some have a greater impact than others.

Income — Highly variable impact, as most companies have multiple types of facilities that generate different types of tax liabilities. Income tax impact will depend on whether the respective states have consolidated or combined filing requirements.

Franchise — For those states whose franchise tax is based on capital investment made in the state, capital intensive facilities will see the greatest impact.

Sales — Sales and use taxes are incurred on multiple items such as ongoing operating costs, electricity (in some states), the purchase of equipment, and in some cases the lease of equipment and services. Sales tax can have a significant impact on capital intensive industries if those facilities are located in states that don't provide tax exemptions. Large corporate headquarters can also see a significant sales tax impact on their ongoing purchases of supplies, information technology equipment, and certain services annually.

Property — Property taxes have a large impact on high-tech and capital intensive investments such as data centers, manufacturing facilities, and bio-tech facilities. Property taxes can also have a significant impact on distribution facilities if those facilities are located in a state that taxes business inventories.
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About the Author

Amy Gerber, Executive Vice President, Jones Lang LaSalle
Amy Gerber specializes in the negotiation and implementation of state and local incentives across the country. She has 12 years of experience in analyzing the tax and other cost impacts to a company's profit and loss statement associated with siting a new facility.

More articles by Amy Gerber

Matt Jackson, Strategic Consulting, Jones Lang LaSalle
Matt Jackson has 15 years experience assisting corporations with the global configuration and optimization of corporate operations to achieve revenue, margin, and innovation objectives. He has conducted projects in more than 25 countries around the world.

More articles by Matt Jackson

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