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Wisconsin tax expert: Proposal may not do much

Tuesday, Dec 11, 2012

* Senate President John Cullerton has often pointed to Wisconsin when he talks up his proposal to require publicly traded corporations to disclose their Illinois income tax payments. But at least one Wisconsin taxpayer group doesn’t think much of the idea

Taxpayer advocates in Wisconsin, which has its own tax-disclosure law, say corporations are generally structured in ways too complicated and too widely scattered to force them to produce a simple, accurate bottom-line figure on the revenue they generate in any given state. Skeptical economists in Illinois agree. […]

Tod Berry, president of the nonpartisan Wisconsin Taxpayers Alliance, said the information is likely to provide the public with, at best, an incomplete portrait.

“Based on Wisconsin’s experience with a different law but in the same general vein,” Berry said, “I would say that the value of this is somewhat limited and the resulting information is probably somewhat suspect just because of the reality and dynamics of a business organization.” […]

Berry points out that many corporations consist of a number of separate subsidiaries, many paying their own taxes. And many companies legally conduct at least a portion of their business in states that have no corporate tax, such as Delaware, by incorporating there rather than in the states where they’re actually based.

“Corporate structure makes this a lot more problematic than it may seem at first,” Berry said.

Judging the effectiveness of Illinois’ corporate subsidies is a nice idea, University of Illinois economist Fred Giertz added, “but this isn’t going to allow them (to do that).”

In case you’re wondering, the Wisconsin group doesn’t appear to be one of those knee-jerk “all taxes are horrible” outfits.

* Related…

* State to organize tax court

* Experts: Recession worst ‘fiscal cliff’ outcome for Illinois

* Quinn: Pension problem is Illinois’ ‘fiscal cliff’

* Erickson: Quinn wins prison battle as reps leave

* Editorial: What we learned from the veto session

* Finke: Hang on, January’s coming

- Posted by Rich Miller        

  1. - Horace - Tuesday, Dec 11, 12 @ 10:13 am:

    1. Figure out how much money the state needs to operate for a given year.

    2. Break that number down into how much should come from individuals, and how much from businesses.

    3. Take the part that is designated for businesses, and assign each and every business doing business in Illinois a dollar amount owed in taxes based on how much business Springfield deems they are doing in the state, or how much the business is worth.

    Pretty easy, yo.

  2. - M O'Malley - Tuesday, Dec 11, 12 @ 10:14 am:

    If corporations can’t figure out how much taxes they paid to a state they need better accountants, or the states need to redo their business organization laws. Really, a CEO doesn’t know how much their organization as a whole pays in state taxes?

  3. - John Parnell - Tuesday, Dec 11, 12 @ 10:18 am:

    This is a great idea. Too many business pretend they pay state taxes, but don’t pay any. While they are at it, the secret trust holdings in businesses should be reported to. Investments under 7 1/2 % of the ownership doesn’t have to be revealed. Illinois is the only state which allows this secret land trust.

  4. - Ken_in_Aurora - Tuesday, Dec 11, 12 @ 10:43 am:

    The Southern: “Let’s call this one lesson’s from the veto session, shall we?”

    My inner proofreader just fainted.

  5. - wordslinger - Tuesday, Dec 11, 12 @ 11:07 am:

    It’s silly to believe that corporations can’t provide state-by-state information. Can’t they just hire “Bob” from Accountemps?

    How about just a postcard then, drawn directly from their already-required Annual Reports.

    Annual Revenues
    Net Profit/Loss
    International Tax Liability
    Federal Tax Liability
    State and Local Tax Liability

    It would take an incompetent intern 10 minutes to provide that information.

  6. - walkinfool - Tuesday, Dec 11, 12 @ 11:22 am:

    They already calculate and provide the number to the state via tax returns. There is no extra work or cost required by the company — unlike what alarmists will spout. The problem is that those returns are confidential. The bill simply makes one small part of what has already been submitted to the state public.

  7. - thechampaignlife - Tuesday, Dec 11, 12 @ 11:32 am:

    Generic business taxes (as opposed to specific ones designed to encourage/discourage specific behavior) should exclude income generated from within Illinois as well as the wages paid to Illinois residents. That income comes from residents who already paid income and sales tax on it so we should be collecting the full amount at the source. We also should encourage jobs by excluding wages paid. Again, the money paid in wages will be taxed by income and sales taxes so just collect it at the source. What we want to capture is income that won’t be captured any other way because it went to jobs out of state, income/sales tax dollars by out of state consumers, or dividends paid to out of state shareholders. A net worth tax on businesses would also be useful to prevent them from hoarding cash which exceeds some prescribed level (e.g. total income for the past year).

  8. - Caveman - Tuesday, Dec 11, 12 @ 12:06 pm:

    It is ridiculous to believe that any corporation can be taxed. New taxes will just be passed on to the unaware consumer which might just be you.

    Also, the effect of the legislation is irrelevant. What matters is that it appears that something was done to get at that big bad corporation. Remember it is appearances, not reality that counts!

  9. - wordslinger - Tuesday, Dec 11, 12 @ 12:17 pm:

    Caveman, that’s a fantastically simple-minded argument.

    As a consumer, I have a choice as to whether I purchase something or not.

    For example, a corporate citizen such as CAT makes use of very expensive government services such as roads, airports, regulated rail, police, fire, courts, etc., as well as a publicly educated workforce to draw upon.

    I’m not in the market for a bulldozer anytime soon.

    You could take your argument and say that no business should ever be taxed because they pass on the cost in prices. And that no worker should ever be taxed because they pass on the cost in the price of their labor.

    Who’s left to pay for civilization?

  10. - Caveman - Tuesday, Dec 11, 12 @ 1:15 pm:

    Me thinks someone is slinging too many words.

    You cannot equate the worker with a corporation, unless the worker is self-employed and sets his own rates. He will pass along his new taxes until he prices himself out of business. Or he will suffer the loss himself. But the worker cannot just raise his cost of labor. Nor can he avoid the tax.

    Don’t just throw out the truth because it is simple. Its when things are made complex that we lose sight of answers.

  11. - the Other Anonymous - Tuesday, Dec 11, 12 @ 1:26 pm:

    I support having corporate tax returns — at a minimum for publicly held corporations — become publicly available, but at the federal level more so than the state. The better rationale for requiring this information is that tax returns often show a different financial picture than annual reports do. This has to do with the differences between accounting rules and tax rules. As a matter of better disclosure under securities laws, federal corporate returns should be disclosed.

    Having said that, I really don’t see much value in disclosing state tax returns to determine which corporation pays its “fair share.” Now, keep in mind that I think the current culture of large corporations in this country is hurting the economy and ordinary people, and that I think corporations are undertaxed. I have no love for corporations because the people that run them put short term profit over everything else, including the long term viability of the company.

    But it’s just that I see too many ways that the information would be manipulated, and too few ways that the information would actually become useful (other than as public relations fodder). We know corporations exploit tax loopholes on the state (and federal) level, and we know how those loopholes are exploited. Plug them or don’t; disclosure won’t help.

  12. - wordslinger - Tuesday, Dec 11, 12 @ 1:54 pm:

    –He will pass along his new taxes until he prices himself out of business. Or he will suffer the loss himself. But the worker cannot just raise his cost of labor. Nor can he avoid the tax.–

    Why would that same logic, such as it is, not apply to corporations or businesses?

Sorry, comments for this post are now closed.

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