By Bill Minor
JACKSON – Among the outlandish bills sponsored by Republican lawmakers I had mentioned a couple of weeks ago was one that would have repealed (yes, repealed) the state income tax on corporations.
It didn’t pass. Now don’t be surprised if the bill resurfaces when the GOP takes over the Legislature in January. Is it mere coincidence that new Republican governors in South Carolina and Florida have proposed the same idea as a priority in their 2012 legislative sessions?
As the corporate no-tax push in Republican legislatures seems to gain headway, a timely new report has been issued by two non-profit tax study groups. It shows that a high percentage of major companies avoided state corporate income taxes during a three-year period beginning in 2008.
Citizens for Tax Justice and the Institute on Taxation and Economic Policy studied returns of 265 corporations among the Fortune 500 that disclosed what they paid in state and local income taxes during the three-year period.
Sixty-eight of the 265 companies paid no state income tax in at least one of the three years, and it was not because they didn’t make money. According to the study, the companies reported to their shareholders they made $117 billion before paying federal taxes.
The CIJ-ITEP report confirms what was learned down here last February. I reported findings of Legislative PEER staffers who looked into what the 150 largest corporations in Mississippi paid in state income taxes for 2006 through 2009.
The PEER staffers, using information from the state Department of Revenue (formerly Tax Commission), found that in 2006 of 130 top companies, 91 paid no income tax and that in the next three years, 103 of the 130 largest employers reported they had paid zero state corporate income tax.
Democratic state Rep. Cecil Brown of Jackson, who headed the House Education Committee, had requested the PEER study as he desperately sought sources of additional revenue to ward off deep cuts in the Mississippi Adequate Education Program.
Brown concluded that many of the corporations had managed to pay little or no state income tax by hiring top lobbyists and tax experts to find loopholes in the tax code.
Brown’s effort at the 2011 session went nowhere, but he did get information from the tax commission that it has gone after some of the tax-avoiding corporations and had three lawsuits under way seeking to plug loopholes.
As the Department of Revenue noted in its memo to Brown, Mississippi’s top corporate tax rate – 5 percent for the last 25 years – is lower than many other states. That states in general have kept corporate income tax rates low is pretty much confirmed in the CTJ-ITEP study which shows nationwide corporate taxes average 6.2 percent. The tax study made by the two groups showed that no matter what the state tax rates are, the companies studied paid only an average 3 percent in corporate income tax.
Mississippi has notoriously been known for giving away the store to lure industry. When and if the Legislature wipes out the corporate income tax entirely, it’s obvious lawmakers would be shifting the state’s tax burden even more so to the state’s huge poorer population in the form of the 7 percent sales tax. Is that what some politicians call a fair tax system?
Columnist Bill Minor has covered Mississippi politics since 1947. Contact him through Ed Inman at email@example.com.