Governing: Corporate Tax Attacks in the States
media mentionBy Penelope Lemov, April 24, 2014
Lawmakers on Capitol Hill have been complaining for years about corporate tax havens. The Congressional Research Services reports that offshore tax shelters cost the federal government between $30 billion and $90 billion a year. But such is the gridlock in Washington that even bipartisan efforts to do something about the problem have stalled. That’s where Maine comes in. Tired of waiting on Washington, it passed legislation this month with an eye toward recouping the estimated $5 million in corporate income tax revenue lost a year.
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The Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) recently issued a joint report on the federal and state corporate tax situation, and found that although the federal marginal tax rate on corporate profits is 35 percent, few corporations pay it. As for the states, the report found that the situation is similar: The average weighted state corporate income tax rate is 6.25 percent, but of the 269 profitable Fortune 500 companies the report studied, the companies only paid an average rate of 3.06 percent. As is the case with the federal corporate tax, some of these national and multinational corporations don’t fork over any tax revenue at all.The report also found that 25 companies paid no state income tax in 2012. Another 127 of the companies paid less than half the average legal state tax rate that year.
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