An expert on corporate taxation suggests to some state lawmakers that the state should spend less time on closing corporate tax loopholes and more time overhauling the entire corporate tax system. The legislature has refused to change what Governor Holden sees as enormous loopholes in Missouri’s corporate tax laws. Studies show the state’s income from corporate income taxes is sharply dropping.Tax professor John McGowan of St. Louis University says there are several reasons and many of them are caused by sharp accountants who are outthinking the state. He says big companies transfer assets to states without corporate taxes, then charge fees on stores here that reduce corporate income in Missouri and further, give the businesses a business expense deduction. McGowan says Missouri hurts itself with millions of dollars in tax credits. McGowan says the state also encourages many smaller companies to incorporate under other laws that limit taxes on the businesses themselves. He says there’s no doubt corporations should pay taxes. But McGowan says the hard part is striking a balance, making a fair system that does not inhibit business development. He suggests the legislature look at franchise or value-added taxes instead of corporate income taxes.
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