December 12, 2007

Additional Research and In-Depth Analysis

"Closing three common corporate income tax loopholes could raise additional revenue for many states," Michael Mazerov, Center on Budget and Policy Priorities, 2002, Revised May 23, 2003. Corporate income tax share of state revenue dwindles from 1979 to 2000. Three strategies for plugging the leaks: 1) eliminate “nowhere income” by enacting the “throwback rule”, 2) close “passive investment company” (PIC) loophole, 3) expand the definition of taxable “business income” to include profits from irregular transactions. The “combined reporting” approach to closing several loopholes at once is described in Appendix A.

"State corporate tax shelters and the need for combined reporting," Michael Mazerov, Center on Budget and Policy Priorities, October 26, 2007. Combined reporting nullifies 3 common tax shelter strategies: PICs, captive REITs and captive insurance companies. It also reduces “nexus isolation” and “transfer pricing”.

"Growing number of states considering a key corporate tax reform," Michael Mazerov, Center on Budget and Policy Priorities, Revised September 12, 2007. Since 2004 Vermont, Texas, New York, West Virginia and Michigan have become the 17th through 21st states to adopt “combined reporting” for their state business tax approach. Governors of Iowa, Massachusetts, North Carolina and Pennsylvania have recommended their states adopt combined reporting laws.

"Which states tax the sale of food for home consumption in 2007?" Center on Budget and Policy Priorities, Revised October 31, 2007. Fourteen states tax grocery food. Five other states allow local governments to tax food.

"New research shows WalMart rigs the tax system to skip out on $2.3 billion in state taxes," Bob McIntyre, Citizens for Tax Justice, April 16, 2007. Over the period 1999 to 2005, Wal-Mart reduced its state income taxes 48% below the average statutory rates.

"State corporate income taxes 2001-2003," Bob McIntyre, Citizens For Tax Justice, February 2, 2005. A detailed analysis of 252 large corporations and their state tax payments in the years 2001-2003. 71 corporations paid no state income tax in at least one of those 3 years. Over the three year period the 252 corporations paid only 38% of their statutory obligation.

"Corporate income taxes in the 1990s," Bob McIntyre, Institute on Taxation and Economic Policy, October 19, 2000. Analysis of federal income tax breaks by year and industry and tax-avoidance strategy. Tables show effective tax rates by year for 250 companies.

"Nowhere income and the throwback rule: a primer," September 9, 2004, Institute on Taxation and Economic Policy. A two-page fact sheet on the “throwback rule” technique for closing the “nowhere income” loophole

"Combined reporting of state corporate income taxes: a primer," February 2, 2007, Institute on Taxation and Economic Policy. A two-page fact sheet on the “combined reporting” technique for closing a range of tax reduction strategies that exploit loopholes in the “separate entity” reporting approach.

"Combined Reporting Model Statute," Multistate Tax Commission, August 17, 2006. The model statute approved by the Multistate Tax Commission and used as the basis for the Food and Business Tax Fairness Act. The Multistate Tax Commission is an intergovernmental state tax agency working on behalf of states and taxpayers to administer, equitably and efficiently, tax laws that apply to multistate and multinational enterprises.

Combined Reporting Model Statute Multistate Tax Commission hearing officer reports and memo to the full commission.

State Business Tax Climate Index Rankings, 2003-2008, Tax Foundation.

State Corporate Income Tax Rates, 2006, January 26, 2007, Tax Foundation.

State Corporate Income Tax Collections, 2006, June 4, 2007, Tax Foundation.

"The Structure of State Taxes in Tennessee: A Fiscal Primer," Tennessee Advisory Commission on Intergovernmental Relations (TACIR) and The University of Tennessee Center for Business and Economic Research. February 2003. A comprehensive review of all the different taxes levied by Tennessee and the policy implications. See pages 7-17 for sales taxes,18-22 for Tennessee’s corporate income tax and page 58 for food tax impact on household in various income ranges.