South By North Strategies, Ltd.

Improving Corporate Taxes

The N.C. Budget and Tax Center argues for the adoption of “combined reporting” as a way of improving the state’s corporate tax code.

Large corporations are able to take advantage of tax shelters because most are structured as parent corporations that each own many separate subsidiary corporations in states across the country. Without combined reporting, multi‐state corporations are able to shift income earned in one state to related corporate subsidiary in a state without a corporate income tax or with special corporate tax exemptions.
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What combined reporting does is require parent corporations and their subsidiaries to “combine” for state tax purposes to file a joint tax return.  The profits of the combined corporation are then apportioned by formula to each state in which the corporation does business according the share of total business activity located in each state.
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As economist Charles McClure, senior fellow at the conservative Hoover Institution and former Deputy Assistant Secretary of the Treasury under President Reagan puts it, “failure to require unitary combination [i.e. combined reporting] is an open invitation to tax avoidance.” And when multi‐state corporations are able to avoid paying taxes, locally‐owned businesses and residents must make up the difference to pay for the public investments that benefit all businesses and residents in North Carolina.

Around The Dial – June 24, 2011

Economic policy reports, blog postings, and media stories of interest:

• The New York Times reports on the fight over extending unemployment benefits.
• The BBC explains the collapse of the Greek state.
• Slate explains the importance of the ruling in Wal-Mart v. Dukes.
• Project Syndicate thinks about “the economic governance the EU needs.”
• Jared Bernstein graphs “the middle class squeeze.”
• Naked Capitalism points out more evidence that the U.S. is becoming a “corpocracy.”

Upside Down Economics

In a recent interview with the Institute for New Economic Thinking, economist Ha-Joon Chang of the University of Cambridge explains how conventional wisdom about “free trade” often is wrong.

May Local Employment Report

South by North Strategies will not be releasing a written analysis of the May 2011 jobs report for local communities in North Carolina on the morning of June 24, 2011.

Firm representatives, however, will be available for comment via phone or email, preferably email. Interested journalists should contact John Quinterno at johnq[at]sbnstrategies[dot]com or 919-622-2392.

Thank you for your interest in South by North Strategies, Ltd.

Around The Dial – June 23, 2011

Economic policy reports, blog postings, and media stories of interest:

• New Deal 2.0 looks at new research about changes in work families.
• Naked Capitalism sees “dubious research” about student loan debt.
• Oliver Blanchard and colleagues describe the “winding road to recovery.”
• Jared Bernstein lays out “some dont’s and do’s for the recovery.”
• Economix asks “if business ever will buy into early childhood education.”