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Dec. 4, 2007 - For immediate release...
Contacts:
- Bill Howell, TFT Nashville, 615-751-5011 (off) or 615-289-1397
(cell)
- Kimberly Douglass, TFT Knoxville, 865-687-9600
- Dave McIlwaine, TFT state chair, Knoxville, 865-584-5112
(hm) or 865-310-5905 (cell)
Close Corporate Tax Loopholes, Cut the Food Tax
This Wednesday, Reagan Farr, the Commissioner of Tennessee’s
Department of Revenue, will address the General Assembly’s
Business Tax Study Committee on the topic: “Tax Loopholes
Which Need To Be Addressed”. Will he question the
loophole that allows large multi-state corporations to avoid
paying taxes that our homegrown Tennessee businesses must
pay?
Right now, many larger corporations are using elaborate
shell games to avoid paying their fair share of taxes to
Tennessee. David McIllwane, Board Chair of Tennesseans for
Fair Taxation (TFT) says, “This is unfair to Tennessee
small businesses that pay their full Tennessee tax, while
having to compete with big companies that use the same state
services as the rest of us.”
In order to avoid paying state business taxes, these large,
multi-state corporations set up subsidiaries in states that
have little or no corporate income tax. Then their Tennessee
affiliate pays high rent or service fees to these subsidiaries,
and in doing so, make it appear as if they have made no
profits in Tennessee. As a result, they can avoid paying
state business taxes that our local businesses still have
to pay.
Fixing this problem is simple, but it takes political
will. By requiring corporations to file under what is known
as combined reporting rules, as 21 other states already
do, we can close these and other tax loopholes. Combined
reporting simply requires companies to add all their related
subsidiaries into one company for tax purposes. This effectively
shuts down many tax evasion schemes with one simple rewrite
in the law. “This is the kind of common sense solutions
we need to look at in Tennessee,” adds McIlwaine.
TFT, along with a growing number of small businesses across
the state, support closing this unfair loophole and using
the additional revenue to reduce the state sales tax on
grocery food. Preliminary estimates suggest that the additional
revenue would be enough to cut another 1.5% to 3% off the
food tax. The organization is currently refining these estimates
as it gears up for the 2008 legislative session.
Dave McIllwane adds, “The proposed Food & Business
Tax Fairness Act will level the playing field for Tennessee
businesses, while returning money to the honest taxpayers
of Tennessee by reducing their food tax.” Because
of TFT’s hard work, the state food tax will be reduced
by half a percent, effective January 1, 2008. McIlwaine
adds, “Reducing the food tax is fundamental to making
our tax system more fair.”
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Tennesseans for Fair Taxation (TFT) is a statewide coalition
committed to creating a more fair tax system that invests
in Tennessee and its communities
Additional information & links:
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