Corporate Responsiblity

"Sunshine is the best disinfectant"
--Justice Louis Brandeis

 

“Taxes are what we pay for civilized society.”
-- Justice Oliver Wendell Holmes

 

“Secrecy is the greatest aid to corruption”
--Lenter, Shackelfor & Slemrod

CEO is committed to achieving corporate responsibility through the establishment of greater corporate tax disclosure, transparency and public accountability.  To that end, CEO and its members worked in coalition with such groups as CT Voices for Children, SEIU State Council, CT Citizen Action Group, and One Connecticut on House Bill 6973.

House Bill 6973 would have required:

• The Department of Revenue Services to annually collect and report to the Finance Committee specific information including name, location, taxes owed and paid and more, about companies receiving business tax exemptions, deductions, credits including.

  The Department of Economic and Community Development to utilize DRS’ report to evaluate each business tax exemption, deduction, credit and/or refund on its benefit to the state’s economy and citizens. 

• A Business Tax Credit Review Committee, chaired by the Finance Committee current co-chairs, be established.

There are many reasons why corporations should pay taxes:[1]

1. The derive benefits from the public services and transportation system provided by the state;
   
2. They rely on the state’s education system to provide a trained workforce;
   
3. They depend on the state’s court system and police to protect their property and business transactions;
   
4. Corporations have special privileges – limited liability and unlimited life, that individuals do not have.

Corporate Taxes Decline

Currently 45 states levy some sort of corporate tax, yet across the board corporate taxes as a revenue source are declining.[2]  For example, according to CT Voices for Children, in Connecticut, 2002 gross corporation business tax revenues were 4.2% of total state tax revenues compared to 10.6% of total state tax revenues in 1992. In other words, in 1992, nearly 1 in every 10 dollars in taxes raised by the state of Connecticut came from the corporation business tax and by 2002, less than 1 in every 50 dollars of taxes collected came from this source. [3]

Nationally, the federal corporate income tax accounted for 20% of federal taxes or 3.9% of the Gross Domestic Product (GDP) in 1969.  By 2003, the same corporate tax accounts for 8% of federal taxes and 1.3% of GDP.[4]

Disclosure

While all agree that tax fairness is important, the ability of states to evaluate state corporate taxes is virtually impossible because neither the Securities and Exchange Commission (SEC) nor most state governments require disclosure of corporate tax payments, credits, breaks or expenditures.  While the SEC requires corporations to file annually tax and profit information at a federal level, it is challenging at best to assess tax fairness due to the many ways in which corporations find reporting and disclosure loopholes.  Without such disclosure:[5]

1.  Legislators and policy makers cannot make informed budget and tax decisions;
   There is no accountability to the public;
2. State revenues continue to decline while corporations receive hidden entitlements.