Irrespective of the election outcome on Nov. 5, 2025, another intense tax policy battle looms for business organizations. The expected clash is between Harris, who advocates for an increase in corporate taxes, and Trump, who seeks to reduce them.

A lesser-known yet intriguing tax discussion will unfold in state capitals across the nation. With many states expecting new legislatures and potentially 13 new governors in place for 2025, different strategies will naturally emerge in search of jobs and investments during a possible economic downturn. While North Carolina has plans to eliminate its corporate income tax by 2030, New York and Maryland are contemplating tax hikes to offset budget deficits.

The prevailing tax policy treats all companies alike, irrespective of their commitment to the state and country. Often, budget decisions serve as a way to favor particular industries with tax breaks based on lawmakers’ preferences. Democrats may support clean energy projects with reduced tax rates, while Republicans might opt for traditional energy producers.

Rather than aligning with changing political agendas every four years, it is crucial to incentivize companies that benefit the community. State governments should adopt tax policies favoring businesses making substantial investments in the local economy. For instance, Nebraska is exploring a more comprehensive tax overhaul that could lead to lower property taxes, rewarding companies making direct local investments.

Encouraging companies that facilitate local infrastructure development and job creation can pave the way for economic growth. Rewarding investments in real estate, physical assets, and employee training can strengthen the local workforce, enhance the community’s socio-economic structure, and contribute to sustainable economic progress. On the contrary, corporations that engage in transactions without significant local investments might face higher tax rates, emphasizing the importance of companies contributing to local growth and development.

States contemplating tax reform could introduce innovative measures like the employee-to-profit ratio to determine tax rates based on a company’s commitment to the state. Similarly, factoring in investments in local infrastructure, real estate, and employee training can provide a comprehensive framework for a locally-focused tax policy. Small businesses, being vital to communities, could thrive under such a structure, encouraging economic growth, especially as the economy evolves with technological advancements. States can leverage new technologies while ensuring their value addition to local communities, underscoring the significance of businesses investing in local economies amidst broader economic changes.