Offering frequent news and analysis from the majestic Evergreen State and beyond, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Wednesday, July 26, 2006

Latest corporate tax giveaway blocked

The House bill which would have eviscerated Washington's B&O was withdrawn just hours before it was to come to a vote Tuesday. The Business Activity Tax Simplification Act, so called, apparently, because it would have simplified many corporate taxes out of existence, would have hit Washington hard. Some estimates ran to $700 million.

The National Governors Association criticized the bill as a "federal corporate tax cut using state tax dollars." According to analysis done by the Center for Budget and Policy Priorities' Michael Mazerov, it would have redefined the way business activity is defined, and bar states from taxing many kinds of businesses they currently tax, for example:
  • a television network would not be taxable in a state even if it has affiliate stations and local cable systems within the state that relay its programming;

  • a restaurant franchisor like Subway or Dunkin’ Donuts would not be taxable in a state, no matter how many franchises it has there; and

  • a bank would not be taxable within a state even if it hires independent contractors there to process mortgage loan applications.
“The bill is a recipe for extensive litigation between states and corporations,” Mazerov said, “because a number of the new rules that the bill would impose to limit state taxing authority are arbitrary, vaguely defined, or inconsistent.” For example, a state could tax a corporation that has a million dollars’ worth of inventory in the state, but it could not tax a corporation that has a million dollars’ worth of unfinished goods in the state that are being processed into finished goods by another firm.

It's over. This corporate raid couldn't stand an election season in full view.

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