Coalition
busting ‘corporate tax ghosts’
Groups urge state pols to close corporate tax
loopholes
OUTRAGEOUS — PEF Vice President Joe Fox tells
demonstrators he’s outraged that some corporations avoid paying their fair
share of taxes by taking advantage of state tax loopholes
— Photo by Deborah A. Miles
By DENYCE DUNCAN LACY
The “Ghostbusters” came to Albany in June, their sights set not on specters,
but rather on corporate giants who have been slipping through state tax
loopholes.
Dressed as ghosts and Ghostbusters, about 50 members of a coalition comprised of
PEF and other labor unions, human service organizations, and faith-based and
other advocacy organizations rallied at the state Capitol to demand that state
lawmakers “bust corporate tax ghosts” by closing corporate tax loopholes.
The demonstrators said those loopholes are costing New York more than $1 billion
in lost revenues annually.
The coalition, called “A Better Choice for New York,” also issued a
Corporate Tax Disclosure Report Card, showing seven major companies — Eastman
Kodak, General Electric, IBM, Toys R Us, UPS, Wal-Mart, and Xerox — earned
failing or poor grades for refusing to reveal their New York state tax payments
and pay their fair share of taxes.
Taxes going overseas
And the groups blasted the corporate giants for paying more in foreign taxes
than they do in state and in some cases federal taxes.
“All of these corporations paid much more in foreign corporate income taxes
than they paid to the 50 states in aggregate,” said PEF Vice President Joe
Fox.
“It is outrageous that some U.S. corporations are contributing more to foreign
countries than they are to the states in which they are citizens, essentially
refusing to support their fair share of basic services. It’s not right. It’s
not American, and we’re asking the Legislature to please fix this,” Fox
said.
According to Securities and Exchange Commission (SEC) filings by these
companies, Toys R Us, Eastman Kodak and Xerox had negative state income tax
liabilities overall, despite having substantial net taxable income. General
Electric may also have been in this category, but it is the only one of the
publicly-traded corporations examined that does not disclose its aggregate
50-state corporate income taxes. Since such disclosure is required by the SEC,
coalition leaders said it’s likely that the amount that GE pays in state
corporate income taxes is so small as to be “immaterial” for financial
disclosure purposes.
Close loopholes; reap millions
The coalition called on lawmakers to close four specific loopholes that together
would raise $1 billion:
- make the Empire Zones and other economic
development programs more accountable (+$250 million);
- reform New York’s corporate Alternative Minimum Tax; (+$200 million);
- adopt the same “nowhere income” rule as 25 other states; (+$150
million); and
- require combined income tax reporting of related corporate subsidiaries
(+$400 million).
A handful of state lawmakers also attended the rally and news conference in
support of the protestors. Among them were Assemblyman Richard Brodsky
(D-Elmsford) who is sponsoring legislation to cut tax breaks for companies that
outsource jobs out of the state, and Assemblyman Daniel O’Donnell
(D-Manhattan). O’Donnell is backing a bill that would require corporations to
combine profits of related businesses and then fairly apportion that total among
the states.
The groups also oppose Governor Pataki’s proposal to use a multi-state
corporation’s sales as the only basis for determining how much of its income
is apportioned to New York state.
“Under a sales-only system, many multi-state corporations will be able to make
extensive use of public services funded by the state, from public safety to
maintenance of infrastructure, while contributing little or nothing to the
funding of those services,” said Frank Mauro, executive director of the
Fiscal Policy Institute.
Profits up, taxes down
And the protestors noted that while tax
breaks to big business have increased even as their profits have risen, the
amount of tax dollars available to the state has declined significantly.
“Corporate income tax receipts, as a percentage of state revenue, has declined
from 10.5 percent in 1979 to 6.6 percent in 2000,” said Marc Lapidus,
executive director of New Yorker’s
for Fiscal Fairness. “Ordinary taxpayers and small businesses are making
up this difference as the state continues to pass the burden to localities.”
The coalition members told reporters lawmakers must act this year, because New
York is facing a $5 billion deficit, and the governor’s proposed budget cuts
funds for education, health care and human services.
“New York must consider budget-balancing options that are good for all of its
citizens and businesses,” said Ron
Deutsch, executive director of SENSES. “The state should reform its
corporate tax law to include real reforms that make large businesses pay their
fair share. We need to stop the system under which these multinational corporate
ghosts get favored tax treatment, compared to small businesses and
individuals.”
The
Communicator July/August 04
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