CORPORATE INCOME TAX VOLATILITY

• The Corporate Income Tax is one of the most volatile revenue sources in the Commonwealth

  • For example, FY 2001, net corporate income tax collections declined by 35.7% compared to the official forecast of a 15.8% decline.
    • Also in FY 2002, net corporate income tax collections declined by 20.2% compared to the official forecast of a 18.7% decline.
    • As more corporations report losses on their income tax returns, net operating losses are generated for each corporation which can be carried forward to offset income in future taxable years.
  • Other contributors to volatility:
    • Coal tax credits

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