CALLING FOR TAX FAIRNESS — At an April 29 Capitol
rally, PEF President Roger Benson calls on state leaders
to close tax loopholes that let big corporations avoid
paying taxes. — Photo by John Epting
Union-backed
coalition presses case for revenue raisers
PEF pushes
to plug corporate tax loopholes
By DENYCE DUNCAN LACY
PEF was at the forefront of a unique effort to save vital
state services in late April, staging a rally outside the
Capitol to publicize the hundreds of millions of dollars
in revenues that would be available if the state plugged
corporate tax loopholes. Making sure they were noticed
amid a half dozen other budget-related protests on April
9, some of the more than 100 protestors dressed in
costumes representing such corporate mascots as Toys R
Us’ Geoffrey the Giraffe and the Tyson Chicken.
As part of the “Better Choice Coalition” of
labor unions and advocacy groups, PEF leaders called on
the state to pass legislation forcing these and other
corporate giants to pay their fair share of taxes. PEF
President Roger Benson said that’s a better way to
help close the state’s budget deficit, than slashing
public services.
Shame on you
“It is shameful that multi-state corporations are
using tax loopholes to avoid paying hundreds of millions
of dollars in state corporate income taxes on the profits
generated by their New York operations,” Benson
said. “How can we continue this giveaway when the
governor has proposed massive cuts for schools, higher
education, and health care that will hurt our kids and
our most vulnerable citizens and raise property taxes?
There’s a better choice.”
The coalition is also advocating for a temporary
surcharge on the income of the wealthiest New Yorkers,
and fighting for more federal funding as a way to pay for
critical public services and programs and to avoid large
local property and school tax increases.
In addition to PEF, the coalition includes Citizen Action
of New York State, the Fiscal Policy Institute (FPI),
Housing Works, Hunger Action Network of New York State,
New Yorkers for Fiscal Fairness and the Statewide
Emergency Network for Social and Economic Security. In
May, the Legislature passed bills closing two corporate
loopholes, including one recommended by the coalition.
The measures are expected to raise at least $210 million
annually
Benson blasts
Business Council
Benson also blasted the state Business Council, which
countered the tax loophole proposal by suggesting the
governor freeze the salaries of public employees.
“The Business Council hasn’t taken one
constructive step to make any sacrifices this year. They
have opposed every reasonable effort to raise revenue and
they have opposed a temporary tax surcharge,” Benson
said. “So far, all we have heard from the Business
Council is ‘protect our wealthy members,’”
he said. And Benson noted that the state already spends
nearly $1 billion less on state employees than it did in
1990, in terms of real wages (See chart, this page).
After the rally, the demonstrators marched to the
Business Council’s Albany headquarters.
According to the coalition, at least 50 multi-state
businesses avoid state corporate income taxes by
transferring ownership of their trademarks and patents to
subsidiaries called passive investment companies (PICs),
located in Delaware and other states that do not tax
royalties or interest income. The royalty is a deductible
expense, and reduces or eliminates the amount of profit
subject to New York’s corporate income tax. The
coalition examined the federal Securities and Exchange
Commission filings of seven major corporations who use
this corporate loophole, including Toys “R” Us,
Home Depot, The GAP, The Limited (Victoria’s
Secret), Radio Shack, Sherwin Williams, and Tyson Foods.
Follow other
states’ lead
“These corporations collectively made over $95.4
billion in gross profits from 1999 to 2001, but paid only
$1.151 billion in income taxes for all states over the
same time period, a collective state income tax rate of
1.2 percent,” said Richard Kirsch of Citizen Action
of New York.
According to Frank Mauro of FPI, 16 states, including
California, Illinois, and Colorado, have closed this and
similar corporate tax loopholes through “combined
reporting.” Combined reporting requires corporations
to add together the profits of all their subsidiaries,
and then allocate a fair share of those profits to their
state based on the portion of the firm’s overall
property, payroll and/or sales in their state.
“We estimate New York would raise $400 million
annually if it adopted a similar law,” Mauro said.
And the coalition members say research shows closing that
and the other corporate loopholes could easily bring in
$1.5 billion dollars.
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COMMUNICATOR HOMEPAGE
Inside This Issue:
Features
PEF pushes to plug corporate
tax loopholes
Members fight proposal to
merge NYSPI
PEF leads demonstration to
protect patients, RNs
Annual lobbying pays off for
PEF nurses
Union gets preliminary
injunction
Departments
President's Message: PEF is
major player
You Said It: Member's
letters this month
Member Mobilization:
Training with rallies
Nurses' Station: PEF acts to
protect nurses
Legislative Update: PEF gets
record restorations
Health Benefits: Empire Plan
Update
Legal Issues: Members win
grievance at DOL
PS&T Contract Update:
Talks continuing
Member Highlights
Retirees In Action: Huge
health hikes threaten
PEF Membership Benefits
Program & Travel Corp
Union Matters
PEF RNs deliver quality care
at Elmira PC
Full mobilization creates
union power in Reg. 5
PEF wins Article 78
Members bring Benson team
back for 3rd term
PEF Election Guide: Download
Supplement
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