Final answer:
States keep corporate taxes low to encourage foreign investment, support small businesses, and stimulate economic growth through increased job creation and investment.
Step-by-step explanation:
States look to keep their corporate taxes low primarily to encourage foreign investment and support economic growth. Lower taxes can attract corporations, which leads to job creation and increases in payroll taxes that benefit the economy. Additionally, having low corporate taxes can support small businesses by allowing them to retain more of their earnings, which they can then reinvest in their operations, thereby fostering innovation and expansion.
For example, former New Jersey Governor Chris Christie used tax incentives to attract businesses to Camden, a city with high unemployment, with the goal of spurring job creation. This strategy is commonly adopted by states with an individualistic mindset aiming to boost the state's economy and promote entrepreneurship.
Moreover, lower corporate taxes can contribute to increased savings and investment. The rationale is that when the government taxes gains from private investment at a lower rate, it encourages investment, leading to economic growth. States also compete internationally, and low corporate taxes can be a strategy for competing, particularly for low-income countries focused on job creation over environmental standards.