U.S. corporations now hold a record $2.6 trillion offshore, a sum that ballooned by more than $200 billion over the last year as companies moved more aggressively to shift their profits offshore, according to a new report, Fortune 500 Companies Hold a Record $2.6 Trillion Offshore, released today by the Institute on Taxation and Economic Policy (ITEP).
State Corporate Taxes
ITEP’s state corporate tax work examines the tax-paying habits of Fortune 500 corporations and corporate contributions to state revenue. It occasionally releases a comprehensive state corporate tax study as a companion to its national report on federal taxes paid (or not paid) by profitable corporations. ITEP also examines state tax incentives provided to corporations in exchange for the promise of economic growth.
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news release March 28, 2017 Corporations’ Offshore Cash Hoard Grew to $2.6 Trillion in 2016
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blog February 27, 2017 States Should Require Combined Reporting of Corporate Income
An important aspect of a 21st century tax code is ensuring that corporate income taxes are easy for corporations to follow, but not easy for them to avoid. As our… -
brief February 24, 2017 Combined Reporting of State Corporate Income Taxes: A Primer
Over the past several decades, state corporate income taxes have declined markedly. One of the factors contributing to this decline has been aggressive tax avoidance on the part of large, multi-state corporations, costing states billions of dollars. The most effective approach to combating corporate tax avoidance is combined reporting, a method of taxation currently employed in more than half of the states that tax corporate income. The two most recent states to enact combined reporting are Rhode Island in 2014 and Connecticut in 2015.
In several states, including Connecticut, Illinois, Massachusetts, Rhode Island, and Vermont, lawmakers adopted the policy after first carrying out in-depth studies of its potential effects. This policy brief explains how combined reporting works.
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report September 30, 2016 Comment Letter to FASB on Income Tax Disclosure
We appreciate the Financial Accounting Standards Board’s (FASB) ongoing review of its accounting standards to ensure that financial statements are “facilitating clear communication of information that is important to financial statement users.” Overall, the changes to disclosure requirements proposed by FASB in the exposure draft would represent a significant step forward toward providing users of financial statements the clarity that they need. We believe, however, that the exposure draft does not go far enough in providing the clarity needed and sought by investors and the public alike.
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brief June 29, 2016 State Corporate Tax Disclosure: Why It’s Needed
Few state tax trends are as striking as the rapid decline of state corporate income tax revenues. As recently as 1986, state corporate income taxes equaled 0.5 percent of nationwide Gross State Product (GSP) (a measure of statewide economic activity). But in fiscal year 2013 (the last year for which data are available), state and local corporate income taxes were just 0.33 percent of nationwide GSP–representing a decline of over 30 percent.
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report December 10, 2015 Delaware: An Onshore Tax Haven
When thinking of tax havens, one generally pictures notorious zero-tax Caribbean islands like the Cayman Islands and Bermuda. However, we can also find a tax haven a lot closer to home in the state of Delaware – a choice location for U.S. business formation. A loophole in Delaware’s tax code is responsible for the loss of billions of dollars in revenue in other U.S. states, and its lack of incorporation transparency makes it a magnet for people looking to create anonymous shell companies, which individuals and corporations can use to evade an inestimable amount in federal and foreign taxes. The Internal Revenue Service estimated a total tax gap of about $450 billion with $376 billion of it due to filers underreporting income in 2006 (the most recent tax year for which this data is available).[i] While it is impossible to know how much underreported income is hidden in Delaware shell companies, the First State’s ability to attract the formation of anonymous companies suggests that it could rival the amount of income hidden in more well-known offshore tax havens.
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report January 30, 2015 Who Pays? (Fourth Edition)
Major tax overhauls are on the agenda in a record number of states, and “Who Pays?” documents in state-by-state detail the precise distribution of state income taxes, sales and excise… -
report January 10, 2015 Who Pays? Fifth Edition
Read the Report in PDF The 2015 Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States (the fifth edition of the report) assesses the fairness of… -
report March 19, 2014 90 Reasons We Need State Corporate Tax Reform
As states struggle with tough budget decisions about funding essential public services, profitable Fortunate 500 companies are paying little or nothing in state income taxes thanks to copious loopholes, lavish giveaways and crafty accounting, a new study by Citizens for Tax Justice and the Institute for Taxation and Economic Policy reveals.
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report January 11, 2013 Proposal to Eliminate Income Taxes Amounts to a Tax Increase on Bottom 80 Percent of Louisianans
Louisiana Governor Bobby Jindal has said that he supports the elimination of the state’s personal and corporate income taxes. In fiscal year 2012, Louisiana collected nearly $3 billion in revenues from its personal and corporate income taxes.
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brief August 1, 2012 Corporate Income Tax Apportionment and the “Single Sales Factor”
One of the thorniest problems in administering state corporate income taxes is how to distribute the profits of multi-state corporations among the states in which they operate. Ultimately, each corporation’s profits should be taxed in their entirety, but some corporations pay no tax at all on a portion of their profits. This problem has emerged, in part, due to recent state efforts to manipulate the “apportionment rules” that distribute such profits. This policy brief explains how apportionment rules work and assesses the effectiveness of special apportionment rules such as “single sales factor” as economic development tools.
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report December 7, 2011 Corporate Tax Dodging In the Fifty States, 2008-2010
In October, South Carolina Governor Nikki Haley suggested that gradually repealing the state’s corporate income tax should be a priority for lawmakers in 2012. Haley’s idea was alarming, but hardly… -
brief August 1, 2011 How State Corporate Income Taxes Work
A robust corporate income ensures that profitable corporations that benefit from public services pay their fair share towards the maintenance of those services, just as working people do.. More than forty states currently levy a corporate income tax. This policy brief explains why corporations should be taxed and the basic workings of the corporate tax.
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brief August 1, 2011 The “QPAI” Corporate Tax Break: How it Works and How States Can Respond
The past quarter century has seen a dramatic decline in the yield of corporate income taxes at both the federal and state levels. Major federal corporate tax legislation enacted in 2004 created a new tax break, known as the “Qualified Production Activities Income” (QPAI) deduction that has further accelerated the decline of the corporate tax. This policy brief evaluates the QPAI deduction and discusses possible state policy responses.
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brief August 1, 2011 “Nowhere Income” and the Throwback Rule
Every state that levies a corporate income tax must determine, for each company doing business within its borders, how much of the company’s profits it can tax. One factor that all such states use to make this determination is the percentage of the company’s nationwide sales that can be attributed to the state. Ideally, all of a company’s sales would be attributed to the states in which it operates, but, due to differences among states’ corporate income tax rules, this is not always the case. In some instances, a portion of a business’ sales are not attributed to any state, which means that a corresponding portion of its profits go untaxed, a phenomenon often referred to as “nowhere income.” This policy brief explains how this phenomenon arises and discusses how a throwback rule can be used to ensure that all corporate profits are subject to taxation.
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brief August 1, 2011 Combined Reporting of State Corporate Income Taxes: A Primer
Over the past several decades, state corporate income taxes have declined markedly. One of the factors contributing to this decline has been aggressive tax avoidance on the part of large, multi-state corporations costing states billions of dollars. The most effective approach to combating corporate tax avoidance is the use of combined reporting, a method of taxation currently employed in more than half of the states with a corporate income tax. Eight states have enacted legislation to institute combined reporting within the past five years. Commissions and lawmakers in several other states, such as North Carolina, Maryland, Rhode Island and Kentucky, have recently recommended its adoption. This policy brief explains how combined reporting works.
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report June 16, 2011 Illinois Must Ignore CME’s Tax Tantrum
How much is enough? On top of the close to $500 million in corporate tax breaks Illinois doles out each year, Governor Pat Quinn now finds himself confronted by a… -
report May 19, 2011 ITEP’s Testimony on Combined Reporting Legislation
My testimony today examines the erosion of Rhode Island’s corporate income tax, and the multistate tax avoidance schemes that have contributed to this erosion. In addition, it discusses the single… -
report November 9, 2010 Testimony before the Maryland Business Tax Commission: Combined Reporting
I’m here to talk about combined reporting, which ITEP views as a vital step towards ensuring the vitality of the Maryland corporate income tax going forward. I’d like to use… -
report July 9, 2009 Testimony before the Maryland Business Tax Commission
Consequently, combined reporting represents the most comprehensive option available to states seeking to halt the erosion of their corporate tax bases and to curtail corporate tax avoidance. It ensures that… -
report May 21, 2009 ITEP Testimony on Corporate Tax Reform before the New York State Senate Select Committee on Budget and Tax Reform
The stated purpose of this hearing is to evaluate the impact of New York’s business taxes on equity and economic growth. These are laudable concerns: the most basic questions to… -
report March 5, 2008 ITEP Testimony on Combined Reporting, Before the Massachusetts General Court Joint Committee on Revenue
Over the past few months, a strong consensus appears to have developed here in Massachusetts, a consensus that the Commonwealth should put a stop to tax avoidance by large and… -
report October 31, 2007 ITEP Testimony on Governor’s Plan: Corporate Tax Reform
My testimony examines a problem facing not just Maryland, but a number of different states – the erosion of the corporate income tax and the related emergence of profitable “zero-tax… -
report April 15, 2007 Combined Reporting – How Does Your State Stack Up?
Over the past few years, a number of states, seeking to address longstanding flaws in their corporate income taxes and significant declines in the revenue they yield, have instituted a… -
brief March 1, 2007 Broad-Based Gross Receipts Taxes: A Worthwhile Alternative?
States currently face a number of fiscal challenges, ranging from unresolved structural deficit, to underlying flaws in their existing tax systems, to the demands posed by ambitious initiatives such as improved access to health care. In response, some policymakers are casting about for new alternatives for generating revenue that do not seem to require visible or difficult changes in law. One such alternative that has gained in popularity in the past few years is a broad-based gross receipts tax.