The think tank Citizens for Tax Justice (CTJ) today released a report showing that 280 of the most profitable companies in the US were able to shelter roughly half of their domestic profits from federal income taxes. In fact, 30 of those companies — including North Carolina’s own Duke Energy — actually faced a negative federal income tax rate over the past three years.
The timing of CTJ’s report highlighting the ability of many profitable corporations to game the corporate tax code seems especially well-timed in light of what transpired yesterday at the General Assembly.
In a meeting of the General Assembly’s Revenue Laws Study Committee, a representative of the Council on State Taxation – a DC-based group representing the interests of more than 600 multi-state and multi-national corporations – encouraged lawmakers to make additional changes to tax rules for multi-state corporations with operations in North Carolina.
Such changes, by potentially overturning assessments by the North Carolina Department of Revenue against companies the Department believes have artificially shifted profits earned here in North Carolina to states with no corporate income tax, could cost the state millions of dollars in one-time revenues.
As suggested here on the Progressive Pulse last month, corporate lobbyists have been pushing to make retroactive the new rules restricting the ability of the NC Department of Revenue to put a stop to abusive corporate tax shelters. At yesterday’s meeting , the general counsel from the Department of Revenue confirmed that allowing those new rules to apply retroactively to pending audits or open tax cases would put over $350 million in state revenues at risk – revenue that would no longer be available to support state investments in public schools, community colleges, or health care.
At a time when corporate profits are at record highs, corporate tax payments are at historic lows, and layoffs in state and local governments caused by declining revenues are driving unemployment to sky-high levels in North Carolina and states across the country, now would be a terrible time to give corporations another windfall that they don’t need and that won’t create jobs.