Stop corporate tax dodging by enacting mandatory combined reporting
  • Petitioned NC GENERAL ASSEMBLY

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NC GENERAL ASSEMBLY

Stop corporate tax dodging by enacting mandatory combined reporting

    1. Petition by

      North Carolina Justice Center

Last week, Citizens for Tax Justice and the Institute on Taxation & Economic Policy released a report showing that 265 consistently profitable Fortune 500 companies avoided paying an estimated $42.7 billion in state corporate income taxes over 3 years.

The data confirms the bad news that over the past two decades, corporations have become remarkably creative in figuring out schemes to avoid paying their fair share in taxes. The result is fewer dollars to invest in schools, roads and safe, healthy communities.

But here's the good news: there is a simple way for our policymakers in North Carolina to crack down on corporate tax dodging. All they have to do is require corporations to pay taxes on profits earned in states where they do business. This common-sense idea, called "mandatory combined reporting," could raise up to $100 million each year in North Carolina.

These dollars would be enough to hire more than 2,000 classroom teachers or preserve vital health services for children, the elderly, and North Carolinians with disabilities that are threatened by recent state budget cuts.

Help us make the case to state lawmakers that it's time to put the people of North Carolina first and ensure that corporations pay their fair share of taxes by enacting mandatory combined reporting.

Recent signatures

    News

    1. One example of why NC needs mandatory combined reporting

      Here’s an example of a tax loophole that mandatory combined reporting would keep closed:

      Real Estate Investment Trusts (aka the “Wal‐Mart Loophole”): Under this tax-avoidance strategy, corporations establish so‐called real estate investment trusts (REITs) to manage their properties and buildings from tax-haven states like Delaware and Nevada. These REITs allow corporations to pay “rent” to themselves and treat this rent as a tax-deductible business expense. The REITs can then refund the rent income to shareholders as tax‐deductible dividends. Wal‐Mart used this strategy against North Carolina and other states to shelter $7.3 billion in profits from state corporate income taxes from 1998 to 2001.

    2. Reached 100 signatures
    3. Want to learn more about why NC needs mandatory combined reporting?

      Large corporations are able to take advantage of tax shelters because most of them are structured as parent corporations that each own many separate subsidiary corporations operating in many states. Without mandatory combined reporting, multi-state corporations are able to shift income earned in one state to related corporate subsidiary in a state without a corporate income tax or with special corporate tax exemptions.

      Mandatory combined reporting requires parent corporations and their subsidiaries to “combine” for state tax purposes to file a joint tax return. The profits of the combined corporation are apportioned by formula to each state according to the share of total business activity located in each state.

      Shutting down corporate tax shelters by enacting combined reporting will result in tax system that is fairer, simpler, and better able to adequately fund the public investments and services that businesses and people of North Carolina rely on.

    Supporters

    Reasons for signing

    • Emily Galvin CARY, NC
      • almost 3 years ago

      If you're coming to NC, using our land and resources, profiting from our skilled and educated workers, who are ALSO a resource, PAY YOUR FAIR SHARE into the community those resources belong to. GIVE and take. That is how it should work.

      REPORT THIS COMMENT:
    • William Liles RALEIGH, NC
      • almost 3 years ago

      Our state really needs to invest in the infrastructure which profits corporations.

      REPORT THIS COMMENT:
    • Margaret Schucker RALEIGH, NC
      • almost 3 years ago

      There is no fathomable reason why my husband and I should pay taxes every year when General Electric pays no taxes and even gets a rebate from the government.

      REPORT THIS COMMENT:
    • Laura Arwood MORRISVILLE, NC
      • almost 3 years ago

      Fairness.

      REPORT THIS COMMENT:
    • Lori Fernald Khamala GREENSBORO, NC
      • almost 3 years ago

      Individuals AND corporations should be proud to invest in our state to help make it strong.

      REPORT THIS COMMENT:

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