We Need State Corporate Tax Reform (from the Center for Tax and Budget Accountability)

The Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ), with the help of many state organizations, released a new study yesterday showing that Fortune 500 companies are paying little or nothing in state income taxes due to numerous loopholes, giveaways, and crafty accounting.

The study, 90 Reasons We Need State Corporate Tax Reform, comes on the heels of a CTJ/ITEP report in February, The Sorry State of Corporate Taxes,    that found many Fortune 500 companies also pay extraordinarily low or no federal income tax. Many profitable companies also are exploiting state loopholes to avoid paying corporate income taxes, and some are even actively pushing for more state tax breaks. The state study examined 269 Fortune 500 companies that were profitable every year between 2008 and 2012. Some of the report's key findings: 90 companies paid no state income tax at all in at least one year, and 38 companies avoided taxes in two or more years. 10 companies, including Boeing, Merck, Rockwell Automation, paid no state income tax at all over the five-year period covered by the study. The average weighted state corporate income tax rate is 6.25 percent, but the 269 companies paid an average rate of just 3.06 percent. The companies examined collectively avoided paying $73.1 billion in state corporate income tax. The study comes at a time when lawmakers in a number of states have seriously considered outright repeal of the state corporate income tax or proposed lowering the corporate income tax rate (including Idaho, Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, North Dakota and others). The study outlines several recommendations for state corporate income tax reform, including: Adopting mandatory combined reporting, which treats a parent and its subsidiaries as one corporation for state tax purposes and is the single most important corporate tax reform available to states. Adopting a minimum tax to ensure that every profitable company pays at least some income tax. Requiring better disclosure of corporate tax payments so state lawmakers know whether companies lobbying them for tax breaks are paying any income taxes to begin with.

The Center for Tax and Budget Accountability is a bi-partisan 501(c (3) research and advocacy think tank that promotes fair, efficient and progressive tax, spending, education, economic, workforce, and community development policies. In pursuit of this mission, CTBA identifies issues, conducts research, provides analysis, shares information, and recommends innovative policy solutions that improve the well-being of poor, low- and moderate-income families in Illinois. High standards of objectivity, professional integrity and independence are the organization's greatest assets. Please consider a tax-deductible gift to CTBA today here. Your friends at CTBA

“Illinois House Speaker Michael Madigan today [March 20] called for an income tax surcharge on millionaires, raising the stakes in the combative governor's race and the fight over how to balance the state's books… But don't be surprised if, in the end, Mr. Madigan packages these increases with some sort of corporate income tax reform that eliminates some incentives but also cuts the rate, [a] source said…” (Madigan moves for millionaire surcharge).