Closing corporate loopholes
Published 11:07 pm Wednesday, August 26, 2015
The regular session of the Legislature and the subsequent special session can fairly be described as fails. In two tries, the state still doesn’t have a General Fund acceptable to Gov. Robert Bentley.
The source of the problem is a serious shortfall in the revenues that pay for the General Fund. Bentley asked lawmakers to increase some taxes and transfer some money from other sources, but the Legislature balked — twice. When the Legislature passed budgets that included deep cuts to almost every state agency in the General Fund, Bentley vetoed them.
The Republican super majority is at odds with itself. Some acknowledge new taxes and closing loopholes are unavoidable. But taking that plunge is proving too difficult for the no-new-taxes crowd.
There has been limited bipartisan support for a bill that would force big corporations to start reporting earnings as a whole, not as subsidiaries of a larger corporation. Now, the big corporations shift their earnings out of state to show no taxable income in Alabama. As a result, ordinary working people are paying the bills while multimillion dollar corporations thumb their noses at the tax man.
Known as combined reporting, advocates said Alabama would gain at least $30 million a year if a bill is enacted. Many states already have done this.
Allowing the big corporations to avoid paying taxes on earnings inside the state is not a business friendly policy. By avoiding taxes, essential services in Alabama suffer, making it a less attractive place to live and work — except to those don’t care about Alabamians.
Corporations must be subject to the same tax rules as those who work for them. If their workers are paying their income taxes, then so should employers. It’s a matter of fairness.
Alabama for years attracted companies with a myriad of tax breaks, some justified and some not so much. But there’s a limit to how much corporations should benefit from this generosity.
In a state that has a tax code in dire need of change, lawmakers can at least balance the tax burden a little by forcing corporations to stop shifting earnings out of state and getting away with it. Adding $30 million to state coffers won’t solve the revenue crisis, but it would be an important piece of the puzzle.
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