Make Corporations Pay Their Fair Share

By taxing corporate owners, an effective corporate income tax has two large advantages for states: the majority of owners are in the richest 1% of the population, and many are not state voters. Corporate income taxes are often the main tax that out-of-state corporations and their shareholders pay for the public benefits enjoyed by their companies.

One reason social services face funding crises is that state corporate income tax revenues have dropped from 9.7% of all state taxes in 1980 down to just 5.7% by 2000. States are increasingly using a variety of tools to have corporations pay their share, including

• Combined Reporting: States are increasingly requiring companies to use combined reporting, listing profit reports for all subsidiary companies together on state tax forms to prevent shell games where companies hide profits through phony transactions among different corporate entities.
• Decoupling: States can save revenue by refusing to automatically grant special interest tax breaks handed out by the federal government --"decoupling" their tax code from the feds.
• Oil windfall taxes: A number of groups have advocated state Windfall Profits Taxes to capture the outsized oil company profits.