While formulary apportionment eliminates the possibility of shifting income across states, it may heighten the responsiveness of businesses to formula factors. The present analysis uses variation in corporate tax policy decisions of U.S. states over the period 1986 to 2012 to better understand the consequences of formulary apportionment, estimating the tax sensitivity of employment, investment, and sales. With the inclusion of adequate control variables, results indicate that economic activity is not sensitive to U.S. state corporate tax policy choices. Still, tax policy choices have important effects on corporate tax revenues. Findings suggest important lessons regarding possible international adoption of formulary apportionment.