Fixing loophole in corporate tax law overdue
It's been five years since The Capital Times' Mike Ivey exposed how multi-state Wisconsin corporations use a loophole to escape paying their full share of state taxes.
Ivey's series of stories took a look at how the larger banks, in particular, set up paper subsidiaries in states like Nevada that don't tax the income of corporations, then transfer the bulk of their profits there and report little or no income in Wisconsin, thereby avoiding most of their state taxes.
The Department of Revenue did go after some of the banks and did get some settlements, but most observers agree that it was for pennies on the dollar.
Incredibly, the loophole in Wisconsin's tax law still exists. The Legislature has done nothing to fix it. The state continues to lose millions in tax receipts as a result.
Meanwhile, the Legislature and the governor are at odds on how to close the multimillion-dollar gap that the state faces in the current budget year. None of them is looking at the possibility of getting our profitable corporations to help out -- except Rep. Spencer Black, who represents Madison's west side in the Assembly.
Black this week called on the budget compromisers to fix the so-called "Las Vegas loophole."
"Instead of relying on gimmicks or risky financial maneuvers to balance the books, we should make sure that profitable, multi-state corporations pay their fair share of taxes," he said.
He's right, of course. Corporations in Wisconsin have been able to cut their share of Wisconsin taxes by almost half since 1979 -- from 11.3 percent of state revenues back then to 6.5 percent today.
Individual taxpayers don't have the luxury of loopholes and other gimmicks to lower their tax rates. They shouldn't be the only ones called on again to fix the budget gap. It's time for the corporations, which use as much of the state's resources as anyone, to pay their fair share.
File photo
Five years ago, Kohl's was one company that used a paper subsidiary in Delaware to own the rights to "Kohl's," which then could get out of paying Wisconsin taxes.
