Beshear Slashes Budget While Letting Tax-Dodging Corporations Off the Hook

Tax revenue in Kentucky is still falling, and Gov. Steve "Toast of the DNC" Beshear cuts state services rather than make his corporate buddies pay their fair share.

Beth Musgrave at the Herald:

State general fund receipts were down 2.8 percent from the previous November, state budget officials announced Friday.

Total revenues for November were $728.7 million, down from $749. 5 million the previous year. However, state revenues need only to increase by a total of .7 percent in the remaining seven months of the fiscal year in order to achieve the official revenue estimate of $8.8 million set by the Consensus Forecasting Group, a group of independent economists who predict how much revenue the state will generate.

That's not likely, considering the Commonwealth's biggest employers and profit-makers are skating tax-free.

Linda Blackford at the Herald:

The Louisville-based parent of such companies as Kentucky Fried Chicken and Taco Bell paid no net corporate income taxes to states over the past three years, even as it generated more than a billion dollars in profits for shareholders, according to a new report.

Yum Brands is one of 68 companies nationwide that paid no state corporate income tax in at least one of the past three years, according to "Corporate Tax Dodging in the Fifty States, 2008-2010" a report released Wednesday by economic justice advocacy groups.

Twenty of those companies averaged a tax rate of zero or less during the 2008-10 period, including Yum Brands, according to the report by the Institute on Taxation and Economic Policy and Citizens for Tax Justice.

"The report's findings are troubling," said Jason Bailey, director of the Kentucky Center for Economic Policy, which also helped produce the report. "At a time of record corporate profits, many large corporations are avoiding paying their fair share for the public services from which they benefit. By deepening Kentucky's budget woes, corporate tax avoidance directly harms our ability to provide quality education, improve health and build a foundation for a strong economy."

Yum Brands officials did not return calls seeking comment on Wednesday. According to the report, Yum paid a state income tax rate of negative 2 percent in 2008, 0.3 percent in 2009 and 0.9 percent in 2010, for a three year rate of negative 0.4 percent.

Of course they didn't return calls. Yum alone could return Kentucky to solvency and restore that last four years of massive cuts just by paying Kentucky's already minimal corporate tax rate.

But they won't, because their buddy Steve is covering for them.

Page One Kentucky:

And you have your governor serving as a public apologist for that mess.

There’s all kinds of bad tax news About Yum! Brands this week. You’ve already read all about it.

So what does Governor Steve Beshear do? Puts out this press release and has his communications staff press media outlets – like this one – to write about it:

Gov. Beshear Announces Long John Silver’s, A&W Restaurants to Keep Global Headquarters in Kentucky

Nearly 100 high-paying, professional jobs to be located in Louisville, Lexington

FRANKFORT, Ky. (Dec. 8, 2011) – Governor Steve Beshear today announced long-time Kentucky corporate citizens Long John Silver’s and A&W Restaurants will keep their worldwide corporate headquarters in the Commonwealth, which means that nearly 100 jobs will stay in Kentucky.

Louisville-based YUM! Brands is set to sell the two companies in the next few weeks.

LJS Partners, a newly formed entity, plans to acquire the stock ownership of Long John Silver’s, along with the franchise agreements and trademarks of more than 1,300 restaurants. The company plans to establish its headquarters in Louisville, creating 60 jobs and a more than $3.8 million investment in the Commonwealth.

A&W Restaurants, which is set to be acquired by A Great American Brand, will return to its roots in Lexington, creating 30 jobs and a nearly $1.9 million investment.

“Long John Silver’s and A&W Restaurants could have located their global headquarters anywhere, but chose to remain Kentuckians. This speaks volumes about the strong, cooperative partnership that exists between the state, Lexington and Louisville officials and our existing business community,” Gov. Beshear said. “Together, our efforts will allow both corporate headquarters to grow faster and larger, as well as expand the international reach of their brands.”

Surprising that your tax dollars would be used for corporate CYA, isn’t it?

But corporations aren't paying taxes in your state, either.

Travis Waldron at Think Progress:

ThinkProgress has documented the repeated tax dodging of large corporations, some of which, like GE, have gone entire years without paying taxes despite hauling in massive profits. Now, that phenomenon has spread to the states, where many corporations have largely avoided paying state corporate income taxes despite growing profits. Some companies, like DuPont, avoided state taxes altogether, paying nothing from 2008 to 2010 even as its profits piled up.

But DuPont wasn’t alone. According to a study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, 68 corporations avoided state taxes entirely for at least one year from 2008 to 2010, costing state governments at least $42.7 billion, as the New York Times reports:

To gauge how much Fortune 500 companies are paying in corporate income taxes, the study looked at the 265 of them that are both profitable and disclose their state tax payments. It found that 68 reported paying no state corporate taxes in at least one year between 2008 and 2010. All together, the study found that the companies reported $1.33 trillion in domestic profits from 2008 to 2010, but paid states only about half of what they would have if they had paid at the average corporate income tax rate of all states — reducing their state taxes by some $42.7 billion.

As the Times notes, the share of state revenues coming from corporate taxes has steadily declined since 1980, from about 10 percent then to less than 6 percent now. And despite Republican rhetoric calling for lower corporate taxes on the national level, America’s rate there remains low as well. Corporations continue to sit on huge amounts of cash without investing in job creation, but GOP politicians and corporate leaders have called for even larger tax giveaways.

Meanwhile, the lost tax revenue would have gone a long way toward plugging budget holes that were instead filled by cutting education, social services, and programs that helped states’ most vulnerable and needy residents.

Nobody makes them pay federal taxes; why should they pay state taxes?