Ski Topper Inc., a New Hampshire-based ski apparel company, wants to expand their operation to the western states and is considering either Idaho or Utah for the new stores. New Hampshire has a corporate tax rate of 7.5%, while Idaho has a tax rate of 5.80% and Utah has a tax rate of 4.85%. If they open additional stores in Idaho, the apportionment will be 70% to New Hampshire and 30% to Idaho, while if they open additional stores in Utah, the apportionment will be 75% to New Hampshire and 25% to Utah.
Which additional location should Ski Topper Inc. choose to open?
Utah, because the income tax rate is 4.58%.
Idaho, because the Idaho location has a higher apportionment.
Utah, because the effective tax rate will be 6.8375%.
Utah, because the effective tax rate will be 6.175%.