May 24, 2008
Study resolution passes with unanimous vote
When TFT initiated the campaign to close corporate tax loopholes as part of the Food & Business Tax Fairness Act, we understood that it would likely be a two to three year initiative. During the 2008 legislative session, the first year of the two to three year initiative, we made progress in educating lawmakers, building public support, identifying small business allies, and gaining valuable media coverage.
A the core of the initiative is a shift to combined reporting for business tax purposes. Combined reporting is an accounting method already used by 21 states representing over half the US economy. It requires businesses with multiple subsidiaries to file a single, unified tax return for the parent company and all its affiliates. In the process, it shuts the door to a wide array of corporate tax avoidance strategies with one simple, common sense change in reporting. Corporations can still shift profits back and forth between their various subsidiaries, but there is no long a tax advantage in doing so under combined reporting.
Based on revenue estimates from 11 other states, we know that combined reporting could potentially recover between $110 million and $250 million currently being lost through tax loopholes. Unfortunately, the officials at the Department of Revenue failed to provide meaningful and justifiable data. As a result, TFT and our legislative allies refocused the strategy in the final weeks to create a study under the direction of the Comptroller of the Treasury.
This study, which passed in the final days by unanimous vote in both chambers, will look a the feasibility and revenue impact of adopting combined reporting rules. The final report is due in December. This will provide TFT with the necessary information to come back again with another push in the 2009 legislative session.
Thanks to all who helped make this victory possible! It's one more step on the road to tax fairness in Tennessee. Click here to learn more about the Food & Business Tax Fairness Campaign.