While Iraq is being savaged by civil war, America is being pillaged again by a “Fifth Column”—actually a column in corporate financial ledgers.
The watchdog Center on Budget and Policy Priorities has issued a new warning of a current U.S. House bill that would savage state budgets already devastated by conservative schemes to make the states, instead of the federal government, responsible for the general social welfare.
I guess the federal government can’t take care of its citizens if it’s spending—this is literally a conservative estimate, courtesy of Don Rumsfeld—$4 billion a month in Iraq.
While U.S. companies scramble to profit from that misadventure, social programs at home go begging—that burden continues to shift to the states. Meanwhile, a bill is expected to quietly creep through the House Judiciary Committee in the next few weeks that would drastically reduce the ability of states to tax U.S. companies. (Don’t worry; if you’re a corporeal citizen, instead of a corporate citizen, you will still be taxed.)
The bill, H.R. 3220, has a hilarious name: “Business Activity Tax Simplification Act of 2003.” It was introduced by Virginia Republican Bob Goodlatte, a co-chair of the Congressional Internet Caucus. He touts the bill as a “common-sense solution to nonsensical tax schemes.” Goodlatte says it would help Internet-based businesses.
Oh, it’s “schemes” he’s against, huh? Among other things the bill would do to help corporate citizens, the center notes:
The legislation would cause state and local governments collectively to lose substantial tax payments from out-of-state corporations that would be freed from their current obligations to pay taxes on their profits and gross sales to particular jurisdictions. A significant share of currently taxable corporate profits would go untaxed by any state, leading to a net revenue loss for the states as a whole.
A whole wave of new corporate tax shelters would be possible. This kind of monkey business is so typical of a dangerous trend to reduce corporate taxes. New York Democratic congressmen Greg Meeks and Joe Crowley (usually a fighting liberal) are, for some reason, among the bill’s 30 co-sponsors. Maybe they think this bill will help small businesses instead of big corporations. They’re dead wrong, according the center, which also notes:
The most significantly affected taxes would be the corporate income taxes levied by 45 states, the District of Columbia, and New York City.
Check out the center’s crystal-clear explanation by staffer Michael Mazerov of the horror of this bill. “Horror” is not too strong a word, as you’ll see. The Republicans are always talking about “tort reform.” They claim to hate lawsuits. Well, this bill would create an avalanche of lawsuits against your state governments by big businesses seeking tax breaks.
Mazerov says the bill “would reward major multistate corporations that have the resources to engage in aggressive tax-avoidance behavior with much lower tax burdens than their small, locally-oriented competitors.” He gives real-world examples that drive his points home:
¶ A bank would not be taxable within a state even if it hired independent contractors there to process mortgage loan applications and the loans were secured by homes located within the state.
¶ A restaurant franchisor like Subway or Dunkin’ Donuts would not be taxable in a state no matter how many franchisees it had in the state and no matter how often its employees entered the state to solicit sales of supplies to the franchisees.
It’s doubtful that the House members who signed on as co-sponsors realized the bill’s implications. To check out the full list of co-sponsors, and for other information, go to the official Congress site. If you’re pissed enough, go to Congress.
This article from the Village Voice Archive was posted on September 16, 2004