Maine has the lowest capital investment tax rate in the U.S. followed by Oregon and Ohio. These states provide a friendly tax environment for companies wanting to relocate or make capital investments. New Mexico, on the other hand, is the least friendly state from a tax standpoint, for capital investment with a tax rate of over 16%. Maine's capital investment tax rate is only a little over 3%.
There are four major types of capitalinvestment projects. In the capital budgeting function of business, there are new projects that businesses undertake along with replacement projects. All of these types of projects have different levels of financial analysis that is required. Obviously, there is a tax effect on the cash flows that are forecasted for each of these four types of projects.
Unfortunately for the U.S., overseas venues have even lower tax rates on capital investment projects. One of the biggest issues in the U.S. today is the outsourcing of jobs, branches of companies, etc. overseas due to cheap taxes, cheap labor, cheap raw material, and more. Given our own tax rates in the U.S. and the virtual certainty that tax rates on companies will go down to stimulate economic recovery, should U.S. companies move overseas to save on taxes? What's your opinion?
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