December 19, 2012

The Courier-Journal: Study names Yum! Brands among companies “dodging” state taxes

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(Original Post)

Posted on December 9, 2011 by Chris Otts

A new report names Louisville-based Yum! Brands as one of 68 Fortune 500 companies that paid no state corporate income taxes in at least one year between 2008-2010, despite earning profits for shareholders.

The report doesn’t say that Yum! has been shorting the state of Kentucky. That level of detail is not available in publicly traded companies’ filings with SEC.

It says that Yum! made $430 million in 2008, yet paid no state income taxes, on balance, that year.

(Yum! spokeswoman Virginia Ferguson said by email that she would see if the company wanted to comment, but she hasn’t followed up.)

The report goes on to discuss specific tax-dodging strategies by corporations, and recounts one battle between the state of Iowa and Yum! unit KFC:

    Most recently, the U.S. Supreme Court declined to
    consider overturning a decision by the Iowa Supreme
    Court that allowed the state of Iowa to tax fast-food giant
    KFC, which avoids having a traditional “physical
    presence” in Iowa by leasing its secret recipe (and logo)
    to independent franchisees based in the state. This series
    of court decisions clearly indicates that many states could
    (and should) do more to prevent companies like KFC
    from using the physical presence standard to avoid
    paying their fair share of state corporate income taxes.
    While almost every state asserts nexus over at least some
    corporations based on economic activities (with
    California, Colorado, Connecticut, New Hampshire,
    Oregon and Wisconsin each adopting an economic
    nexus standard in the last five years), virtually none of the
    states have fully exercised this ability.

Here’s the New York Times’ coverage of the report, which was produced by Citizens for Tax Justice and the Institute on Taxation and Economic Policy.



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