The Salt Lake Tribune: Some say corporate tax-dodging hurts public schools
media mentionBy Cathy Mckitrick
The Salt Lake Tribune
A new study takes aim at tax-dodging corporations, revealing that between 2008 and 2010, 68 Fortune 500 companies managed to avoid paying any state income tax for one or more of those three years.
The nonprofit Institute on Taxation and Economic Policy (ITEP) was joined by the advocacy organization Citizens for Tax Justice (CTJ) in releasing the 32-page report Wednesday, “Corporate Tax Dodging in the Fifty States, 2008-2010.”
In its examination of 265 profitable Fortune 500 corporations, the study concluded that states collectively missed out on $42.7 billion in tax revenues during the three-period between 2008 and 2010.
Voices for Utah Children, an advocacy group, reviewed the study and concluded that dozens of the companies operating in Utah paid out less than 1 percent in income tax during those years — well below the state’s statutory rate of 5 percent — while making millions of dollars in profits.
Allison Rowland, Voices for Utah Children research and budget director, said such actions directly impact the state’s future.
“When big corporations don’t pay state income taxes, our public schools have less money,” Rowland said in a statement, adding that Utahns who work for these Fortune 500 companies might be surprised to discover they pay state income tax at a higher rate than their corporate employers.
Rowland said the study can’t measure whether companies paid income tax in Utah since they are not required to disclose that information.
“Still, it makes clear just how many of them paid little or no state income tax on balance,” Rowland said.
While Wells Fargo made $49.7 billion in profits over the three-year period, the bank paid only 0.7 percent in state income tax. But the study also points out that some corporations appeared to pull their own weight — JP Morgan Chase & Co. earned $32.7 billion in profits while paying 9.1 percent in state income tax, while Whole Foods Market earned $834 million and paid out 10.3 percent in state income tax.
The ITEP study ignores a fundamental fact, said Royce Van Tassell, vice-president of the Utah Taxpayers Association.
“Corporate income is also taxed a second time as individual income when it gets distributed to shareholders,” Van Tassell said. “To say that corporations aren’t paying their fair share is really an anomaly — those taxes are paid for by workers, shareholders and consumers.”
Van Tassell advocates trimming corporate tax wherever possible in order to attract business investment into Utah.
But Doug Macdonald, former chief economist for the State Tax Commission and current chief economist and president of Econowest Associates, Inc. said cutting corporate taxes would further undermine Utah’s public school funding.
“I think they made a correct conclusion that many corporations don’t pay a fair share of taxes to the state, based on all the advantages they have doing business in the state,” Macdonald said.
No one can make the case that Utah needs less tax money going to schools, he added.
Utah ranks last in the nation in terms of per-pupil spending and tax policies approved in 2010 are poised to further erode that status as they phase in over time, according to data Macdonald compiled for Utahns for Public Schools.
“No one would fault corporations for minimizing their tax,” Macdonald said. “But the extent they go to is sort of repugnant to the individual person who can’t set up a corporation in another state or country to limit their own tax liability.”