Coalition calls on State Legislature to bust corporate tax ghosts

Coalition report card flunks 7 Corporations for hiding State income taxes

Groups urge state pols to close corporate tax loopholes

Frank Mauro, FPI: (518) 786-3156
Denyce Duncan Lacy, PEF: (518) 785-1900, ext 277
Ron Deutsch, SENSES (518) 463-5576
Mark Dunlea, HANNYS (518) 434-7371

Albany, N.Y.) More than seventy representatives of labor unions, human service organizations, faith-based and other advocacy organizations joined forces today with “Ghostbusters” at the State Capitol to demand the State Legislature bust corporate tax ghosts by closing corporate tax loopholes — which cost New York State more than $1 billion annually.

These loophole closure proposals include making the Empire Zones and other economic development programs more accountable ($250 million), reforming New York’s corporate Alternative Minimum Tax ($200 million), adopting the same “nowhere income” rule as 25 other states ($150 million), and requiring combined income tax reporting so that multi-state corporations’ income is fairly apportioned among the states ($400 million).

The rally participants included a number of ghosts to represent various multistate companies that hide their income from state taxation, such as GE, Kodak and IBM. During the middle of the rally, several ghostbusters jumped out of a car in front of the Capitol to capture the ghosts and raise revenue for the state. Kristen Brown of the Greater Upstate Law Project led the rally in singing the Ghostbuster theme song, with the lyrics slightly changed (see lyrics at end)

The groups also issued a “Corporate Tax Disclosure Report Card,” showing seven major companies received failing or poor grades for refusing to reveal their New York State tax payments. The Coalition accused these corporations as being “corporate ghosts” and called on the State Legislature to “bust” them for tax dodging.

When New Yorkers for Fiscal Fairness asked 12 major New York employers how much they paid in New York State corporate income taxes, six did not answer at all and only four provided information on their tax payments. Eight large multi-state corporations refused to disclose their New York payments.

The eight corporations that failed this corporate good citizenship test were Eastman Kodak, General Electric, IBM, Toys R' Us, UPS, Wal-Mart, Wegmans and Xerox.. All of these firms except Wegmans are publicly traded and, as such, are required by the U. S. Securities and Exchange Commission (SEC) to disclose the amount of their federal corporate income taxes and the total amount of their state corporate income taxes paid to all 50 states in aggregate.

An examination of the SEC filings by these companies showed that three of them , Toys “R” Us, Eastman Kodak Corp., and Xerox, actually 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 its aggregate 50-state corporate income taxes. Since such disclosure is required by the SEC, our only guess is that the amount that GE pays in state corporate income taxes is so small as to be “immaterial” for financial disclosure purposes.

All of these corporations paid much more in foreign corporate income taxes than they paid to the 50 states in aggregate. “It is outrageous that some US 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,” said Joe Fox, vice president of the New York State Public Employees Federation (PEF).

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. This would open even more “income shifting” and “nowhere income” loopholes for multi-state and multi-national corporations than exist today. “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 to public education, while contributing little or nothing to the funding of those services,” stated Frank Mauro, Executive Director of the Fiscal Policy Institute.

Adopting the same “nowhere income” rule as 25 other states (called a “throwback” rule) and requiring “combined reporting would prevent multi-state and multi-national corporations from profiting, at the expense of other business and individual taxpayers, from tax avoidance schemes. Combined reporting requires that corporations combine profits of related businesses and then fairly apportion that total among the states.

“They shake down state and local officials for more and more tax breaks – in many cases operating completely tax free. A pretty good deal for them but a pretty bad deal for the people and the other businesses, which have to pick up a bigger and bigger share of the tab,” said

While tax breaks to big business have increased, even as corporate profits have risen, the amount of tax dollars available to the states 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. Ordinary taxpayers and small businesses are making up this difference as the State continues to pass the burden onto localities,” said Marc Lapidus, Executive Director of New Yorker’s for Fiscal Fairness.

“We need a tax system that requires everyone to make a fair contribution. It is unfair when large, multi-state corporations are allowed to hide income from being taxed by New York and other states. This puts small New York businesses at a competitive disadvantage and costs us local jobs. It is a major reason why New York has such high property taxes. If our state politicians showed us much zeal in tracking down income from multi-state corporations as they do from welfare participants, we would be able to easily balance the state budget,” stated Mark Dunlea, Associate Director of HANNYS.

New York is currently facing a $5 billion deficit, and the Governor is cutting 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. It must avoid tax policies that give an unfair advantage to large multi-state and multi-national corporations. The single sales factor is a revenue and jobs loser. The state should reform its corporate tax law to include real reforms that make these large businesses pay their fair share,” said Ron Deutsch, Executive Director of SENSES. “We need to stop the system under which these multinational corporate ghosts get favored tax treatment compared to small businesses and individuals.”

“Our state simply cannot afford to continue the tax loopholes for huge, profitable corporations. New York is the epicenter of the AIDS epidemic in American. We need big profitable corporations to pay their fair share and we call on Governor Pataki and legislative leaders to close the loopholes,” said Michael Kink of Housing Works.

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Ghostbusters

Ghostbusters...
If there's income missing in your general fund
Who ya gonna call (ghostbusters)
If you’ve lost corporate income and it don't look good
Who ya gonna call (ghostbusters)

I ain't afraid a no ghost
I ain't afraid a no ghost
If you're seein' things runnin' out of state
Who can you call (ghostbusters)
An' invisible company keeping all its profits
Oh who ya gonna call (ghostbusters)
I ain't afraid a no ghost
I ain't afraid a no ghost
Who ya gonna call (ghostbusters)
If you're out of funds pick up the phone
An call (ghostbusters)

I ain't afraid a no ghost
I hear it likes the pols
I ain't afraid a no ghost
Who you gonna call (ghostbusters)
Mm...if you've had it with corp-rate loopholes
You better call ghostbusters
ghostbustin' makes me feel good
I ain't afraid a no ghosts

Don't get caught alone oh no...ghostbuster
When it gets in the tax code
If you’re overrun with scams
I think you better call ghostbusters
Ooh... who you gonna call (ghostbusters)
Who you gonna call (ghostbusters)
Ah, I think you better call (ghostbusters)

I can't hear you...(ghostbusters)
Who you gonna call (ghostbusters)
Louder ghostbusters
Who you gonna call (ghostbusters)
Who you can call ghostbusters...(till fade)

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Corporate Responsibility Report Card (the more detailed one is uploaded)

Seven Big U.S. Multi-National Corporations Get “Fs” In Civics; All Refuse To Disclose How Much They Pay In NY State Corporate Income Taxes

Toys “R” Us, Eastman Kodak Corp. General Electric, and Xerox Paid NO overall State income taxes in 2003 despite making over $30 billion in gross profits.

Toys “R” Us ($3.7 billion in gross profits, -$28 million in all state income taxes) and Kodak (4.3 billion in gross profits, -$107 million in all state income taxes) share the Dunce Hat for not paying any overall U.S. or State income taxes in 2003 despite making $8 billion in gross profits. (But they paid foreign income tax.)

Xerox ($915 million in gross profits, -$17 million in all state income taxes ) paid NO overall state income taxes and paid TWICE as much to foreign governments as it did to the U.S. Government.

International Business Machines Corp. (IBM, $33 billion in gross profits, $234 million in all state income taxes) paid: 0.4 percent of its taxable profit to states; BUT 17.1 percent, or $1.9 BILLION to FOREIGN governments.

Wal-Mart Associates Inc. ($15 billion in gross profits, $333 million in all state income taxes) pays more of its taxable profits (4%) to foreign governments than it pays in overall State income taxes (2.3%).

United Parcel Service (UPS, $4.4 billion in gross profits, $112 million in all state income taxes) was the only corporation examined that paid more in State income taxes than in foreign taxes. But UPS’s percentage of taxable profits going to State income taxes has dropped from 3.8% in 2001 to 2.6% in 2003, while its percentage to foreign governments is rising.

GE ($20.1 billion in gross profits, $0 in all state income taxes )paid 8.4% of its taxable profits to the federal government and 7.1 percent to foreign governments. (In 2002, that figure was 0.7%) GE pays so little in State income taxes that it not “material” and does not have to be disclosed in their SEC filings.

While these corporations take advantage of our infrastructure, education system and military protection, they scheme to pay as little as possible for the benefits of being American.