By Chuck Sheketoff
It doesn’t take too long for your blood to boil when watching We’re Not Broke.
The documentary, which recently aired at the Salem Progressive Film Series (and, hopefully, will soon come to your neighborhood theater) shows how the corporate loophole lobby and its army of tax accountants have rigged the system, enabling corporations to avoid federal income taxes. As corporations stash away oodles of tax savings, some politicians claim that the country is “broke” and aim the budget ax at the social safety net.
General Electric and Bank of America
Filmmakers Karin Hayes and Victoria Bruce’s documentary explains clearly how the likes of General Electric and Bank of America have paid no federal income taxes in some years. The typical American family, of course, paid more than these corporate behemoths.
“Americans know in their heart that this is unfair,” says a small business owner in Chicago, one of several citizen activists appearing in the film who are working to make corporations pay their fair share.
Yes, it’s infuriating to learn that large corporations, with their billions in revenue and millions in CEO salaries, have gotten away with paying nothing in federal income taxes in some years. But one of the lessons from the film is that an important national public structure — disclosure laws governing publicly traded corporations — allows us to learn which corporations are the freeloaders.
Not so in Oregon. Our state does not require corporations to disclose how much they pay — or don’t pay — in corporate income taxes.
Like the federal corporate income tax system that is the subject of We’re Not Broke, Oregon’s corporate income tax system is riddled with loopholes.
As a result, corporate income taxes have dwindled despite rising profits. In the mid-1970s, corporations paid about 18 percent of all Oregon income taxes. In the current two-year budget, state experts project that the share will be about 6 percent.
Corporate Income Tax System
Oregon’s corporate income tax system has been so captured by the loophole lobby that the state lottery brings more money into the state’s coffers these days than the income taxes paid by all profitable corporations combined.
In 2009, more than 3,600 profitable corporations paid only the Oregon corporate minimum tax. That included 42 corporations with profits that year of over $1 million and six with profits of over $10 million. But for the fact that Oregon has a modest corporate minimum tax, loopholes would have allowed many of these corporations to pay nothing. Now they pay next to nothing.
Regrettably, the data doesn’t tell us is which corporations are gaming the system or how.
To stop water leaking into the basement, you first need to see which pipes are responsible for the leak. The same holds true for repairing the leaks in our revenue system. That’s why Oregonians should demand that our elected leaders enact corporate tax disclosure.
Disclosure should require large and publicly-traded corporations to disclose their total U.S. income and how they apportioned it to Oregon, their total income subject to Oregon taxes and their final tax liability. None of this information would reveal trade secrets or otherwise competitively sensitive information.
What it would do is reveal which corporations are (and which ones are not) shirking their responsibility for supporting the public structures that make their business success possible, such as schools, universities, worker training programs, courthouses and public safety.
I’ve often quipped that if I could pick my next dream job it would be to make documentary films. Indeed, a poster of Michael Moore’s The Big One hangs in my office.
It would be nice if my first documentary were a sequel to We’re Not Broke, chronicling how a band of intrepid activists and fairness-minded legislators forced corporations in Oregon to come clean on their taxes. Φ
Chuck Sheketoff is Executive Director of the Oregon Center for Public Policy.