CALPIRG : Help stop corporate tax loopholes

Too many corporations get away with paying little or no state taxes, leaving
the rest of us to pick up the tab for funding schools, public safety and
other needs. One way corporations do it is by routinely reporting lower
profits to the state than they do to their shareholders and potential
investors.

Ask your Senator to become a co-author of the Honest Corporate Tax Reporting
Act (AB 675, Klehs), which would require corporations to disclose and
explain any differences between profits reported to shareholders and profits
reported to the state tax board. Then ask your family and friends to help by
forwarding this e-mail to them.

To take action, click on the link below or paste it into your web browser:

http://calpirg.org/CA.asp?id=398&id4=ES


Background:

Most of us diligently pay our taxes to fund highways, schools, public safety
and other needs. Unfortunately, too many corporations get away with paying
little or no state taxes. The California Budget Project reports that 78
percent of corporations paid no more than the $800 minimum franchise tax in
2001. That means that if you earn more than $32,000 a year without
dependents, you pay more in state taxes than most corporations.

A major tax loophole that allows this to happen is the fact that
corporations are allowed to routinely report lower profits to the state tax
board than they do to their shareholders. The widespread abuse of double
accounting practices allows companies to manipulate profit numbers through
the use of offshore tax shelters and other tactics. The practice hurts
investors and taxpayers alike by hiding the true fiscal health of companies
and increasing the tax burden for the rest of us.

For example, you might remember the tricky accounting used by Enron. They
reported $3.625 billion in profits to their shareholders between 1996 and
2000. Yet they reported only a small fraction of that amount, $76 million,
in profits to the IRS.

And Enron isn't the only corporation that inflates their profits to
investors or hides profits from tax agencies. A Harvard study found that in
1998, for every $1 in income reported to the federal government for tax
purposes, $1.63 was reported to shareholders.

The Honest Corporate Tax Reporting Act, AB 675 (Klehs), would require
corporations to disclose to California's Franchise Tax Board the profits and
other accounting numbers that they report to shareholders. The Act will
shine a light on tricky accounting, and help ensure that California's tax
board fairly collects the taxes we need to fund highways, schools, public
safety and other programs.

Ask your Senator to become a co-author of the Honest Corporate Tax Reporting
Act (AB 675, Klehs), which would require corporations to disclose and
explain any differences between profits reported to shareholders and profits
reported to the state tax board. Then ask your family and friends to help by
forwarding this e-mail to them.

To take action, click on the link below or paste it into your web browser:

http://calpirg.org/CA.asp?id=398&id4=ES

Sincerely,

Steve Blackledge
CALPIRG Legislative Director
SteveB@...
http://www.calpirg.org