Clarion Ledger: Corporations already evading Miss. state income tax
media mention5:51 PM, Dec. 15, 2011
Written by Bill Minor
Among the outlandish bills sponsored by Republican lawmakers I had mentioned a couple of weeks ago was one that would have repealed (yes, repealed) the state income tax on corporations.
It didn’t pass. Now don’t be surprised if the bill resurfaces when the GOP takes over the Legislature in January.
Is it mere coincidence that new Republican governors in South Carolina and Florida have proposed the same idea as a priority in their 2012 legislative sessions?
As the corporate no-tax push in Republican legislatures seems gaining headway, a timely new report has been issued by two non-profit tax study groups. It shows that a high percentage of major companies dodged state corporate income taxes during a three-year period beginning in 2008.
Citizens for Tax Justice and the Institute on Taxation and Economic Policy studied returns of 265 corporations among the Fortune 500 that disclosed what they paid in state and local income taxes during the three-year period.
Sixty-eight of the 265 companies paid no state income tax in at least one of the three years, and it was not because they didn’t make any money. According to the study, the companies reported to their shareholders they made $117 billion before paying any federal taxes. Sixteen of the companies paid no state income tax in all three years.
The CIJ-ITEP report confirms what was learned down here last February.
I reported findings of the legislative Performance Evaluation and Expenditure Review Committee of what the 150 largest corporations in Mississippi paid in state income taxes for 2006- 2009.
PEER found that in 2006 of 130 top companies, 91 paid no income tax and that in the next three years, 103 of the 130 largest employers reported they had paid zero state corporate income tax.
State Rep. Cecil Brown, D-Jackson, who headed the House Education Committee, had requested the PEER study as he desperately sought sources of revenue to ward off deep cuts in the Adequate Education Program. Brown, who in the 1990s served as state budget officer, had sought assistance from a tax attorney for the Alabama Education Association who helped close corporate tax loopholes in that state.
Brown concluded that many of the corporations had managed to pay little or no state income tax by hiring top lobbyists and tax experts to find loopholes in the tax code.
Brown’s effort at the 2011 session went nowhere, but he did get information from the tax commission that it has gone after some of the tax-avoiding corporations and had three lawsuits seeking to plug loopholes. We’ve yet to find out how successful the commission has been.
As the Department of Revenue noted in its memo to Brown, Mississippi’s top corporate tax rate – 5 percent for the last 25 years – is lower than many other states.
Iowa and Pennsylvania, mentioned in the Commission memo, have a 9 percent-plus rate. Nearby Arkansas has a 7 percent top corporate rate.
That states in general have kept corporate income tax rates low is pretty much confirmed in the CTJ-ITEP study which shows nationwide corporate taxes average 6.2 percent. The tax study made by the two groups showed that no matter what the state tax rates are, the companies studied paid only an average 3 percent in corporate income tax.
Mississippi has notoriously been known for giving away the store to lure industry. When and if the Legislature wipes out the corporate income tax entirely, it’s obvious lawmakers would be shifting the state’s tax burden even more so to the state’s huge poorer population in the form of the 7 percent sales tax.
Is that what some politicians call a fair tax system?