Rocky Mountain Telegram: Tax loopholes favor giant corporations
media mentionTuesday, March 25, 2014
Gov. Pat McCrory and the Republican-led N.C. General Assembly in 2013 made good on their promises to cut corporate income taxes in order for North Carolina to better compete to land new businesses and industries – and the jobs that come with them.
North Carolina’s tax rate on corporations fell from 6.9 percent last year to 6 percent this year. The tax rate is scheduled to drop even further – to 5 percent in 2015.
The move should make the state more competitive for new companies on a regional and national scale. But as lawmakers in Raleigh – and in Washington – look for ways to make income taxes less of a burden on big corporations, they might consider collecting at least what the companies should pay under the reduced tax rates.
That doesn’t happen very often for the bigger companies in North Carolina or in the United States. Duke Energy, for example, paid just a little more than 1 percent in state income taxes on billions of dollars in profits collected between 2008 and 2012, according to a new study put together by the Citizens for Tax Justice and the Institute for Taxation and Economic Policy. It actually paid nothing during those years to the federal government.
The same story held true for dozens of other giant companies in the study, even as they generated hundreds of millions, and in some cases, billions of dollars in profits each year.
In the case of a giant utility such as Duke Energy (which has since merged with Progress Energy to form the biggest utility company on the planet), we would hope the savings garnered from tax breaks would be passed onto users. It’s little wonder that some Duke customers are kicking up a fuss about the utility company’s proposal to pass along to customers the cost of cleaning up more than 30 coal ash deposits at power plants around the state.
Duke and the other companies in the study earned their tax breaks fair and square. They simply took advantage of loopholes built into state and federal tax laws. Closing the loopholes in order to collect the taxes that were intended to be levied on such companies would go a long way toward helping governments at all levels better meet their expenses. It might even allow a break on the tax burden shouldered by us individuals.
But big corporations have wallets that allow them to hire lobbyists who do their best to make sure tax laws favor their clients.
It’s a difficult system for lone rangers in Raleigh or Washington to change. And it’s even more difficult for Joe and Jane Taxpayer.