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NC Budget and Tax Center

When Thanksgiving rolls around, no one wants to watch someone else eat all the turkey and then have to pick up the grocery bill all by themselves. But that’s what’s happening in our nation’s budget debate—highly profitable multinational corporations are using special tax loopholes, credits, deductions, and outright giveaways to avoid paying their fair share of taxes while asking the rest of us to pick up the tab for fixing our nation’s budget challenges through spending cuts to key investments that help grow the economy. Even worse, at a time when many families will be celebrating their Thanksgiving blessings or sharing those blessings with less fortunate friends and neighbors, many in Congress are trying to protect these tax loopholes while simultaneously cutting federal food assistance for hungry families.

That’s why N.C. Policy Watch and the N.C. Budget and Tax Center are continuing to shine a light on corporate tax dodging. In recent years, corporate profits have neared record highs while corporate tax collections are at a 30-year low, so now is the time to raise new revenues, rather than asking hungry families to bear the brunt of addressing our nation’s budget challenges. And an excellent source of new revenues involves the billions of dollars in corporate tax loopholes, deductions, credits, and outright giveaways that allow too many multinational corporations to avoid paying their fair share of taxes. So instead of giving all the turkey to profitable corporations and asking the rest of us to foot the bill, let’s ask these profitable companies to pay their fair share for Thanksgiving dinner.

To underscore this message, N.C. Policy Watch and the N.C. Budget and Tax Center are continuing to profile a number of corporate tax avoiders with strong connections to North Carolina (Click here to read previous profiles of Duke Energy, Merck & Co. and International Paper).

And keeping with the holiday theme of food, this month, we’re focusing on the highly profitable fast food giant Yum! Brands, revealing the following:

  1. the size and scope of their businesses,
  2. the taxes they have avoided paying in recent years, and
  3. the methods they use to accomplish this.

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NC Budget and Tax Center

Word on the street in our nation’s capital is that prospects for a short-term budget deal may be brightening for a package that funds the federal government and replaces some or all of the sequestration spending cuts for 2014. As budget negotiators continue to work on some kind of bipartisan deal, a recent opinion survey conducted by Hart Research Associates may have a lot to say about what this still nascent deal looks like—specifically, the overwhelming popularity of raising new revenues by closing corporate tax loopholes.

Here are some of the poll’s most important findings:

  • Americans overwhelmingly support a budget that raises new tax revenues over a plan that relies solely on spending cuts to address our nation’s fiscal challenges.  Specifically, 58 percent support a budget that increases tax revenue from the wealthy and corporations, while only 36 percent support a budget that does not increase taxes on any American—a 22-point advantage for raising new tax revenues.
  • And by significant margins, Americans see closing tax loopholes for profitable corporations as the best way to raise those revenues, especially in contrast to a plan that doesn’t raise any revenues at all.  Specifically, 67 percent of Americans favor a budget that closes corporate tax loopholes and limits tax breaks for the wealthy, and only 28 percent support a budget that does not increase taxes on any American
  • Healthy majorities support replacing at least half of the sequestration spending cuts with new revenues from closing corporate loopholes.  Specifically, 53 percent support reducing the spending cuts by half and replacing them with new tax revenue from the wealthy and corporations, and only 27 percent want the cuts to go fully into effect—a 26 percent advantage for new revenues.

And support for new revenues spikes even higher when it comes to closing the most egregious tax loopholes, like those that promote shipping American jobs overseas or that those allow hedge fund managers to pay lower taxes than middle class families:

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NC Budget and Tax Center

This Friday, approximately 1.7 million North Carolinians—including 51,000 veterans—will see their food assistance cut when a temporary boost in Supplemental Nutrition Assistance Program (SNAP) benefits ends, according to the Center on Budget and Policy Priorities (CBPP). Such cuts will be another blow to Tar Heel families trying to make ends meet and get a foothold on the economic ladder. Of those receiving SNAP (formerly known as food stamps) in North Carolina, 85 percent are households with children, older adults, or people with disabilities (see this chart).

SNAP benefits are very modest now, with an average monthly benefit of $121.37 per person in North Carolina. The looming benefit cut will vary depending on family size, ranging from $36 a month for a family of four to $11 a month for a single person. These are deep cuts, equating to about 16 “thrifty” meals per month for a family of three, according to the CBPP report. Read More

NC Budget and Tax Center

The government shutdown finally ended last week, but the fight for a balanced approach to the federal budget continues. As part of the deal struck last week, Congress agreed to negotiate a comprehensive budget agreement that addresses sequestration and opens the door for new revenues. Perhaps the best potential source of new revenues comes from reining in the special tax loopholes, deductions, and outright giveaways that allow too many corporations to avoid paying their fair share in taxes.

Over the last year, we’ve profiled some of these tax loopholes, along with the corporations that use them to avoid their responsibilities. This month’s issue takes a look at IBM, which earned $45 billion in profits over the past five yeas, and managed to shelter almost $20 billion of those profits in offshore bank accounts to avoid US taxation. As a result, Big Blue managed to lower its actual effective tax rate to 5.8 percent, well below the statutory corporate tax rate of 35 percent.

As long as corporations like IBM are able to avoid paying their taxes, the rest of us will be asked to pick up the tab for addressing our nation’s budget challenges through spending cuts to key investments that grow our economy and protect our most vulnerable.

For more details, see the profile on IBM.

NC Budget and Tax Center

As multiple news outlets are reporting, Congress appears poised to secure a deal that re-opens the federal government, allows the US Treasury to pay its bills by lifting the debt limit, and establishes formal talks to develop a long-term strategy for putting our nation’s fiscal house in order. Assuming Congress passes the deal, these new negotiations set up the opportunity for a new approach to the federal budget—one that includes new revenues to support our economy rather than new spending cuts that increase poverty.

The deal itself is straightforward and includes no significant policy concessions to members of the US House of Representative who precipitated the government shutdown as part of efforts to repeal the Affordable Care Act. For details on the deal, see below the fold:

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