All of this public policy posts can be dry, boring, and hard to understand. Since I have new viewers I want to address these corporate tax issues by starting with the Clinton use of Executive Order to install the Republican Congressional policy of FEDERALISM ACT. Bush and Obama later embraced this same executive order and has used it to
PRETEND THEY CAN IGNORE ENFORCEMENT OF ALL FEDERAL LAWS AND US CONSTITUTIONAL RIGHTS.
This is why these few decades every state has been doing anything it wanted---including all of the frauds against our Federal agencies including Wall Street fraud with the Federal government seeking no justice for citizens. I say this was illegal because the use of Executive Order by a President does not allow such SWEEPING ACTIONS AGAINST OUR FEDERAL LAWS AND US CONSTITUTION. Congress would have impeached or gone to the Supreme Court to stop Clinton, Bush, Obama if they were not global pols. Republican voters at first loved this---but now see the goals are total dismantlement of national and state sovereignty and US Constitutional rights.
Now, how does all this tie to the Doctrine of UNIFORM TAXATION?
I showed yesterday that uniform taxation is in the US AND MARYLAND CONSTITUTIONS. The ignoring by national leaders of this UNIFORM TAXATION created the tax breaks, subsidizing, deregulation of taxation that exists today at national, state, and local levels. Now that this doctrine has been ignored these few decades-------global Wall Street pols and institutions are calling for the repeal of UNIFORMITY TAX LAWS -----that state taxes cannot discriminate between citizens or businesses.
Most American citizens have no idea what abolishing a 'dormant' Commerce Clause Prohibition on Discriminatory Taxation' looks like. It has as a goal allowing the rich and corporations tax anybody anyway they want. These few decades it was used by states to dispense favored tax breaks to corporations and or citizens under the guise of community development. Since Bush and Obama it has meant moving huge sums of Federal funding to selected global corporations as outsourcing and at the local level it is what all of the tax benefit districts and now property tax breaks along with all of the TIFS and corporate tax breaks that filled Baltimore City Hall and Maryland Assembly policy these few decades. It has created huge discriminatory taxation for business, communities, and citizens. Those citizens that liked this and profited from this are now going to join the rest as all of that power to control taxation anyway they want will go to global corporations controlling government sending all tax revenue to corporate subsidy and profit.
AND NONE OF THIS IS LEGAL AND IT IS UNCONSTITUTIONAL AND A POLICY CANNOT SIMPLY GO 'DORMANT' SIMPLY BECAUSE OF ILLEGAL LACK OF ENFORCEMENT OVER A FEW DECADES.
Opening Statement — Edward A. Zelinsky†
The Time Has Come to Abolish the Dormant Commerce Clause Prohibition on Discriminatory Taxation
†The Morris and Annie Trachman Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University; Visiting Professor of Law, Yale Law School
It is time to abolish the dormant Commerce Clause prohibition on discriminatory taxation. Indeed, such abolition is overdue. This prohibition has played a historically important role in implementing the Framers’ vision of the United States as an economically integrated free-trade zone, unimpeded by state barriers to national commerce. However, the prohibition is today doctrinally incoherent and politically unnecessary.
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THIS IS THE NUMBER ONE ISSUE FOR VOTERS IN MOST CITIES INCLUDING BALTIMORE AND I BET NO ONE UNDERSTANDS ALL THIS WAS ALWAYS ILLEGAL UNDER FEDERAL TAX DISCRIMINATION LAWS AND MARYLAND CONSTITUTION PROMOTING TAX UNIFORMITY....CORPORATE TIFS AND TAX BREAKS
Below you see this policy of ignoring the Tax Discrimination laws originates yet again in a Republican think tank. If Republicans are extreme wealth and corporate power----they are going to be more so as they become these global corporations and that is where we are today. Republicans used again the Republican voters wanting to create winners and losers with tax policy across a state like Maryland to deregulate this UNIFORM TAXATION LAW----and now the advantages and power to use it will go to global corporations and the global corporate tribunal deciding policy for all nations tied to international trade policies.
What was used by Baltimore Development to create a tax-free zone downtown while everyone else including small businesses paid more taxes will explode as International Economic Zone policies tied to Trans Pacific Trade Pact are installed.
WE WILL NOT ALLOW THESE POLICIES TO BE INSTALLED AND WILL RETURN TO UNIFORM TAXATION.
Social Democrats created this uniformity and enforced this uniformity law because it kills free market competition-----it has nothing to do with free market tax policy -----and it always ends with the poor,working class, and small business paying more taxes. Remember, the goal of NEW WORLD ORDER is all Americans will be brought to the same levels of poverty as that in Asia through these US International Economic Zones so if you are a tax winner in this game today-----you will join all others in getting soaked with taxation by global corporate tribunal. Think of our Revolutionary War and the motivation-------British royals and East India Corporation were taxing colonists more and more and more -----and that sparked the break and creation of the US and national sovereignty from those global 1%.
THEY ARE BACK AND TRYING TO DO THE SAME THING---ONLY THIS TIME ITS A GLOBAL CORPORATE TRIBUNAL AND A SOVEREIGN UNITED STATES WILL BE TAKEN TO COLONIAL STATUS.
This is a long article but please glance through----citizens in Baltimore will relate to this article from Texas----remember, Texas and Bush neo-cons created these models---and Johns Hopkins and Baltimore Development are Wall Street and neo-conservative.
Tax Increment Financing: A Bad Bargain for Taxpayers
By Daniel McGraw
First published by Reason Magazine, January, 2006
The decision was made easier by the financing plan that Fort Worth will use to accommodate Cabela’s. The site of the Fort Worth Cabela’s has been designated a tax increment financing (TIF) district, which means taxes on the property will be frozen for 20 to 30 years.If you’re imagining an attraction that will draw 4.5 million out-of-town visitors a year, the first thing that jumps to mind probably isn’t a store that sells guns and fishing rods and those brown jackets President Bush wears to clear brush at his ranch in Crawford, Texas. Yet last year Cabela’s, a Nebraska-based hunting and fishing mega-store chain with annual sales of $1.7 billion, persuaded the politicians of Fort Worth that bringing the chain to an affluent and growing area north of the city was worth $30 million to $40 million in tax breaks. They were told that the store, the centerpiece of a new retail area, would draw more tourists than the Alamo in San Antonio or the annual State Fair of Texas in Dallas, both of which attract 2.5 million visitors a year.
Largely because it promises something for nothing—an economic stimulus in exchange for tax revenue that otherwise would not materialize—this tool is becoming increasingly popular across the country. Originally used to help revive blighted or depressed areas, TIFs now appear in affluent neighborhoods, subsidizing high-end housing developments, big-box retailers, and shopping malls. And since most cities are using TIFs, businesses such as Cabela’s can play them off against each other to boost the handouts they receive simply to operate profit-making enterprises.A Crummy Way to Treat Taxpaying Citizens
TIFs have been around for more than 50 years, but only recently have they assumed such importance. At a time when local governments’ efforts to foster development, from direct subsidies to the use of eminent domain to seize property for private development, are already out of control, TIFs only add to the problem: Although politicians portray TIFs as a great way to boost the local economy, there are hidden costs they don’t want taxpayers to know about. Cities generally assume they are not really giving anything up because the forgone tax revenue would not have been available in the absence of the development generated by the TIF. That assumption is often wrong.
“There is always this expectation with TIFs that the economic growth is a way to create jobs and grow the economy, but then push the costs across the public spectrum,” says Greg LeRoy, author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation. “But what is missing here is that the cost of developing private business has some public costs. Road and sewers and schools are public costs that come from growth.” Unless spending is cut—and if a TIF really does generate economic growth, spending is likely to rise, as the local population grows—the burden of paying for these services will be shifted to other taxpayers. Adding insult to injury, those taxpayers may include small businesses facing competition from well-connected chains that enjoy TIF-related tax breaks. In effect, a TIF subsidizes big businesses at the expense of less politically influential competitors and ordinary citizens.
“The original concept of TIFs was to help blighted areas come out of the doldrums and get some economic development they wouldn’t [otherwise] have a chance of getting,” says former Fort Worth City Councilman Clyde Picht, who voted against the Cabela’s TIF. “Everyone probably gets a big laugh out of their claim that they will draw more tourists than the Alamo. But what is worse, and not talked about too much, is the shift of taxes being paid from wealthy corporations to small businesses and regular people.
“If you own a mom-and-pop store that sells fishing rods and hunting gear in Fort Worth, you’re still paying all your taxes, and the city is giving tax breaks to Cabela’s that could put you out of business,” Picht explains. “The rest of us pay taxes for normal services like public safety, building inspections, and street maintenance, and those services come out of the general fund. And as the cost of services goes up, and the money from the general fund is given to these businesses through a TIF, the tax burden gets shifted to the regular slobs who don’t have the same political clout. It’s a crummy way to treat your taxpaying, law-abiding citizens.”
Almost every state has a TIF law, and the details vary from jurisdiction to jurisdiction. But most TIFs share the same general characteristics. After a local government has designated a TIF district, property taxes (and sometimes sales taxes) from the area are divided into two streams. The first tax stream is based on the original assessed value of the property before any redevelopment; the city, county, school district, or other taxing body still gets that money. The second stream is the additional tax money generated after development takes place and the property values are higher. Typically that revenue is used to pay off municipal bonds that raise money for infrastructure improvements in the TIF district, for land acquisition through eminent domain, or for direct payments to a private developer for site preparation and construction. The length of time the taxes are diverted to pay for the bonds can be anywhere from seven to 30 years.
Local governments sell the TIF concept to the public by claiming they are using funds that would not have been generated without the TIF district. If the land was valued at $10 million before TIF-associated development and is worth $50 million afterward, the argument goes, the $40 million increase in tax value can be used to retire the bonds. Local governments also like to point out that the TIF district may increase nearby economic activity, which will be taxed at full value.
So, in the case of Cabela’s in Fort Worth, the TIF district was created to build roads and sewers and water systems, to move streams and a lake to make the property habitable, and to help defray construction costs for the company. Cabela’s likes this deal because the money comes upfront, without any interest. Their taxes are frozen, and the bonds are paid off by what would have gone into city coffers. In effect, the city is trading future tax income for a present benefit.
But even if the dedicated tax money from a TIF district suffices to pay off the bonds, that doesn’t mean the arrangement is cost-free. “TIFs are being pushed out there right now based upon the ‘but for’ test,” says Greg LeRoy. “What cities are saying is that no development would take place but for the TIF.…The average public official says this is free money, because it wouldn’t happen otherwise. But when you see how it plays out, the whole premise of TIFs begins to crumble.” Rather than spurring development, LeRoy argues, TIFs “move some economic development from one part of a city to another.”
OH, YOU MEAN IT WAS ALWAYS ABOUT INSTALLING TAX POLICY IN US INTERNATIONAL ECONOMIC ZONE CITIES LIKE BALTIMORE.
Development Would Have Occurred Anyway
Local officials usually do not consider how much growth might occur without a TIF. In 2002 the Neighborhood Capital Budget Group (NCBG), a coalition of 200 Chicago organizations that studies local public investment, looked at 36 of the city’s TIF districts and found that property values were rising in all of them during the five years before they were designated as TIFs. The NCBG projected that the city of Chicago would capture $1.6 billion in second-stream property tax revenue—used to pay off the bonds that subsidized private businesses—over the 23-year life spans of these TIF districts. But it also found that $1.3 billion of that revenue would have been raised anyway, assuming the areas continued growing at their pre-TIF rates.
The experience in Chicago is important. The city invested $1.6 billion in TIFs, even though $1.3 billion in economic development would have occurred anyway. So the bottom line is that the city invested $1.6 billion for $300 million in revenue growth.
The upshot is that TIFs are diverting tax money that otherwise would have been used for government services. The NCBG study found, for instance, that the 36 TIF districts would cost Chicago public schools $632 million (based on development that would have occurred anyway) in property tax revenue, because the property tax rates are frozen for schools as well. This doesn’t merely mean that the schools get more money. If the economic growth occurs with TIFs, that attracts people to the area and thereby raises enrollments. In that case, the cost of teaching the new students will be borne by property owners outside the TIF districts.
Such concerns have had little impact so far, in part because almost no one has examined how TIFs succeed or fail over the long term. Local politicians are touting TIFs as a way to promote development, promising no new taxes, and then setting them up without looking at potential side effects. It’s hard to discern exactly how many TIFs operate in this country, since not every state requires their registration. But the number has expanded exponentially, especially over the past decade. Illinois, which had one TIF district in 1970, now has 874 (including one in the town of Wilmington, population 129). A moderate-sized city like Janesville, Wisconsin—a town of 60,000 about an hour from Madison—has accumulated 26 TIFs. Delaware and Arizona are the only states without TIF laws, and most observers expect they will get on board soon.
First used in California in the 1950s, TIFs were supposed to be another tool, like tax abatement and enterprise zones, that could be used to promote urban renewal. But cities found they were not very effective at drawing development into depressed areas. “They had this tool, but didn’t know what the tool was good for,” says Art Lyons, an analyst for the Chicago-based Center for Economic Policy Analysis, an economic think tank that works with community groups. The cities realized, Lyons theorizes, that if they wanted to use TIFs more, they had to get out of depressed neighborhoods and into areas with higher property values, which generate more tax revenue to pay off development bonds.
The Entire Western World Could Be Blighted
Until the 1990s, most states reserved TIFs for areas that could be described as “blighted,” based on criteria set forth by statute. But as with eminent domain, the definition of blight for TIF purposes has been dramatically expanded.
THERE IS CLINTON NEO-LIBERALISM MOVING GLOBAL CORPORATE CONTROL FORWARD.
In 1999, for example, Baraboo, Wisconsin, created a TIF for an industrial park and a Wal-Mart supercenter that were built on farmland; the blight label was based on a single house in the district that was uninhabited. In recent years 16 states have relaxed their TIF criteria to cover affluent areas, “conservation areas” where blight might occur someday, or “economic development areas,” loosely defined as commercial or industrial properties.
The result is that a TIF can be put almost anywhere these days. Based on current criteria, says Jake Haulk, director of the Pittsburgh-based Allegheny Institute for Public Policy, you could “declare the entire Western world blighted.”
In the late 1990s, Pittsburgh decided to declare a commercial section of its downtown blighted so it could create a TIF district for the Lazarus Department Store. The construction of the new store and a nearby parking garage cost the city more than $70 million. But the property taxes on the new store were lower than expected, as the downtown area surrounding Lazarus never took off the way the city thought it would. Sales tax receipts were also unexpectedly low. Lazarus decided to close the store last year, and the property is still on the block. Because other businesses were included in the TIF, it is impossible to predict whether the city will be on the hook for the entire $70 million. But given that the Lazarus store was the centerpiece of the development, it is safe to say this TIF is not working very well, and Pittsburgh’s taxpayers may have to pick up the tab.
If businesses like Lazarus cannot reliably predict their own success, urban planners can hardly be expected to do a better job. Typically, big corporations come to small cities towing consultants who trot out rosy numbers, and the politicians see a future that may not materialize in five or 10 years. “The big buzzwords are economic development,” says Chris Slowik, organizational director for the South Cooperative Organization for Public Education (SCOPE), which represents about 45 school districts in the southern suburbs of Chicago, each of which includes at least one TIF. “The local governments see a vacant space and see something they like that some company might bring in. But no one thinks about what the costs might be.…They are giving away the store to get a store.” Big-box retail chains such as Target and Wal-Mart seem to be the most frequent beneficiaries of TIFs. (Neither company would comment for this story, and local politicians generally shied away as well.)
Given the competition between cities eager to attract new businesses, TIFs are not likely to disappear anytime soon. “Has it gone overboard?” asks University of North Texas economist Terry Clower. “Sure.…But the problem is that if a city doesn’t offer some tax incentives, the company will just move down the road.” According to Clower, “In a utopian world, there would be no government handouts, and every business would pay the same tax rate. But if a city stands up and says they aren’t doing [TIFs] anymore, they will lose out.”
Instead, it’s the competitors of TIF-favored businesses that lose out. Academy Sports & Outdoors, which employs 6,500 people, has about 80 sporting goods stores in eight Southern states, including a store in Fort Worth. When the Fort Worth City Council was considering the TIF for Cabela’s, Academy Sports Chairman David Gochman spoke out against the tax incentives, realizing that his company is a big business, but not big enough. “This is not a nonprofit, not a library, not a school,” he said. “They are a for-profit business, a competitor of ours, along with Oshman’s and Wal-Mart and others.”
TIFs Have Become the Standard Handout
Al Dalton, owner of Texas Outdoors, a 10,000-square-foot hunting and fishing shop in Fort Worth, echoed the sentiment that the city was favoring one business over another. “We don’t have the buying power, and we don’t have the advertising dollars,” Dalton said. “It doesn’t make any difference even if we’ve got the best price in town if nobody knows about it. The deep pockets, in every way, [make] a lot of difference.”
And that may be the key to understanding how TIFs are now applied: The companies with the deep pockets are able to fill them with subsidies.
The Cabela’s location in Fort Worth does not fit any of the blight criteria people had in mind when TIFs were first created. The 225,000-square-foot store, with its waterfalls, multitude of stuffed animals, and wild game café, sits on prime property just off Interstate 35. It is a few miles down the road from the Texas Motor Speedway (which has its own TIF), and the 200,000 NASCAR and IRL fans who attend races there three times a year—not to mention the fans who come to the speedway’s concerts and other special events—might want to shop at Cabela’s.
The area around Cabela’s is affluent and has been growing for years. A half-dozen shopping centers nearby were on the drawing board well before the TIF was considered. Within a five-mile radius of the hunting/fishing megastore, 10,000 new homes have been built since 2000. That same area is expected to grow by 20,000 people in the next two years.
But the argument against the “but for” assumption is not being heard. In 2004 a state judge threw out a lawsuit against the Cabela’s TIF by a Fort Worth citizens’ group that claimed blight was never proven, and that the city was misusing TIFs in a prosperous area that needed no tax breaks for future development. The blight designation came from a pond and stream on the property. It was an odd designation, given that the property is in a prime development area and ponds and streams are not what one would classify as blighted.
The press releases and newspaper articles about the new Cabela’s emphasize that the store is going to draw more people to Texas than visit the Alamo (the studies were done by Cabela’s). The press release never mentions that a Bass Pro Shop store, part of a chain almost identical to Cabela’s, is just 10 miles down the road. While Cabela’s was negotiating its TIF with Fort Worth, it was also negotiating a TIF with the city of Buda, 120 miles away, outside of Austin. Cabela’s got about $20 million from Buda, and the same tourist claims are being made there. If each Texas store is going to draw 4.5 million tourists, as the chain claims, that means 9 million people will be coming to Texas every year just to visit the two Cabela’s stores.
“The notion that a hunting store would draw all these tourists is ridiculous,” says Greg LeRoy. “But what is even more ridiculous is cities thinking that tax breaks are the primary reason businesses relocate or expand in certain areas. There are so many other factors at play—transportation costs, good employment available, housing costs and quality of life for executives—that the tax breaks like TIFs aren’t very high up on their priority list. But these corporations are asking for them—and getting them—because everyone is giving them out. TIFs have become the standard handout, and the businesses have learned how to play one city off the other. Businesses would be stupid for not asking for them every time.”
If TIFs continue to multiply at the present rate, we may see the day when every new 7-Eleven and McDonald’s has its own TIF. That prospect may seem farfetched, but it wasn’t too long ago that cities wouldn’t even have considered giving up tens of millions of dollars in exchange for yet another store selling guns and fishing rods.
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The US Constitution was written geared to commerce activity within the US and it created special powers of the Federal government in regards to foreign commerce. Federal commerce laws trump state's rights in foreign trade. All of the freedom from tax discrimination laws states were allowed will now end because----International Economic Zones in the US will still be considered FOREIGN COMMERCE and states and localities will not be able to control or place taxes on global corporations operating in those zones.
This will mean that all of those global corporations planned to fill Baltimore as an International Economic Zone will never pay taxes but as we already see-----taxation on everyone else will soar. State's rights Republicans are shouting against this and calling for impeachment and calling all this unconstitutional ----AND THEY ARE RIGHT------but they are also the ones that drove the deregulation of us of this clause-----weakening it enough for global corporations to simply PRETEND THEY CAN IGNORE IT NOW.
This is the point------the US Constitution would never allow the corporate monopolies that were US corporations and it certainly does not allow for global corporate monopolies in the US. The Constitution does not allow the designation of US cities or counties as A FOREIGN ECONOMIC ZONE having the goal of allowing global corporations to operate OUTSIDE OF US CONSTITUTIONAL AND FEDERAL LAWS. That goes for state and local laws as well----and it pertains to this UNIFORM TAXATION.
Uniformity Clause...all Duties, Imposts and Excises shall be uniform throughout the United States....
Article I, Section 8, Clause 1Teacher's Companion Lesson (PDF)
Among the unsatisfactory aspects of the Confederation government were its inability to regulate interstate and foreign commerce and its weak powers of taxation. The Constitution cured these defects, but thereby created a new danger: the greatly strengthened national government might abuse its powers by oppressing politically weaker groups and strangling the economic activity that the Framers hoped to promote.
At the Constitutional Convention, the Uniformity Clause was initially joined with what is now the Port Preference Clause (Article I, Section 9, Clause 6), which forbids Congress to give preferences "by any Regulation of Commerce or Revenue" to the ports of one state over those of another. Along with other provisions restricting congressional power over taxes and commercial regulations, these two were designed to forestall economically oppressive discrimination. The Port Preference Clause limits both the commerce and taxing powers, whereas the Uniformity Clause applies to the taxing power alone. Their common origin, however, is a sign of their common purpose: each was meant to prevent geographic discrimination that would give one state or region a competitive advantage or disadvantage in its commercial relations with the others.
Because the goods and activities that can be taxed are distributed unequally through the country, virtually all duties, imposts, and excises have nonuniform effects. A tax on oil production, for example, will affect certain regions more severely than others. Because the Constitution expressly empowers Congress to levy these taxes, it must also permit some of the nonuniform effects that inevitably accompany them. The principal challenge in interpreting the Uniformity Clause is to distinguish between the kind of nonuniformity that is forbidden by the Constitution and the inevitable nonuniform effects that accompany legitimate duties, imposts, and excises.
In its earliest exposition, the Supreme Court declared that a tax is uniform if it "operates with the same force and effect in every place where the subject of it is found." Edye v. Robertson (1884). This rule correctly recognized that the Uniformity Clause was meant to forbid geographically nonuniform taxes without outlawing all geographically nonuniform effects. But the formula is inadequate, because it does not describe the limits on Congress's discretion to define the "subjects" of taxation. Suppose, for example, that Congress chose to define the subject of an excise tax as "oil produced in Alaska." The rule would be formally satisfied, but the most flagrant geographic discrimination would be possible.
In United States v. Ptasynski (1983), a unanimous Court concluded (1) that any tax in which the subject is defined in nongeographic terms satisfies the Uniformity Clause, and (2) that where the subject is defined in geographic terms, the tax will be scrutinized for "actual geographic discrimination."
The first part of this test creates a very large safe harbor for discriminatory taxes, which can almost always be framed without using overtly geographic terminology (for example, "oil whose production might affect caribou populations"). Nor is it clear that the second part of the test puts any real limit on Congress's power to impose discriminatory and oppressive taxes, for the Court nowhere defined "actual geographic discrimination." In fact, the Court went out of its way to emphasize that review of statutes using geographic terminology would be highly deferential. With no promise of effective judicial enforcement, the Uniformity Clause has, at least for the present, apparently been rendered nugatory, save for Congress's own sense of its obligations under the Constitution.
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Below you see the drive to UNIFORMITY at the state level driven by interstate commerce--------but as this title shows-----21st century taxation------this is driven by global policy that will have all states with the same tax policies and a global corporate tribunal controlling those Federal laws. States are crying foul to have Federal government tell them how to tax----and now they are fighting the Federal UNIFORMITY TAX LAWS thinking this will stop it-----what do global corporations want states to do? GET RID OF THIS CONSTITUTIONAL UNIFORMITY LAW.....this is how global pols always use small businesses and states to fight to get rid of Federal policies that are what would fight against the International Economic Zone policy allowing all US Constitutional rights and laws be ignored.
REMEMBER, THE GOAL OF GLOBAL CORPORATIONS IS TO USE TAX LAW GLOBALLY AND THEY WILL SET THE TAX RATE AT THE FEDERAL LEVEL FOR TAXATION IN ALL INTERNATIONAL ECONOMIC ZONES IN THE US AND ALL OTHER NATIONS TIED TO INTERNATIONAL TRADE PACTS.
This will remove all taxation from global corporations and 'progressively' move more and more taxation downward. See the use of progressive======it is not the social democratic progressive that has taxation on rich and corporations higher.
These changes are not motivated by US corporations doing business across state lines----it is about global corporations operating the same across the US and operating the same across nations tied to International Trade Pacts.
If your Maryland Assembly pols respond with shouts to GET RID OF UNIFORMITY TAXATION CLAUSE-----they are working for global corporations to install global tax policy----not to protect the state and citizens rights.
21st Century Taxation
This blog by a tax professor is about tax reform and moving tax systems into the 21st century. It focuses on tax system weaknesses, critiques selected reform proposals, and offers new ideas, with an emphasis on federal, California and multistate matters. Additional information - articles, reports and links, can be found at the 21st Century Taxation website (see link below right). I welcome your comments.
Search This BlogTuesday, July 7, 2009
Uniformity of State Tax Laws - Possible? Desired?
When businesses operate in more than one state, the question arises as to how to determine how much of its income should be subject to tax in each state in which it is subject to tax. This is a matter that has been argued at the Supreme Court level numerous times and states have modified their approaches over the years.
Decades ago (1957), the National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the Uniform Division of Income for Tax Purposes Act (UDITPA). It was last amended in 1966. UDITPA provides rules on apportionment and allocation of multistate business income among states.
In 2007, NCCUSL decided to form a committee to look at changes to update UDITPA. Section 17 of UDITPA which deals with sourcing of sales that are not of tangible property was to be a focal point, but other areas could be looked at as well. Section 17 was clearly outdated. UDITPA provides that sales of tangible personal property are sourced to the destination state. Section 17 uses a costs of performance sourcing rule meaning that typically, sales of services and intangibles are sourced to the origin state. Several states including California have modified their laws to source services to the market (destination) state.
The Committee held its first meeting in late May 2008. There were protests by some businesses urging NCCUSL to terminate the project (see letter submitted by COST and a business coalition). Yet, others supported the project (see, for example, letter from Utah).
Uniformity among states cannot be guaranteed through a UDITPA revision though because states are not required to adopt the Act.
Well, on June 30, the committee voted to recommend termination of the project. Basically, it doesn't meet the goals for a uniform law if it is unlikely that any state is going to adopt the model law.
So, does this mean that Congress might step in?
I doubt it. If Congress took on how to source and apportion income among the states, there would be long debate among members of Congress, the business community and state governments (and some academics, of course) as to what the uniform rule should be. I think Congress is well aware that the states are struggling with how much to tax businesses versus how much to incentivize them to locate or stay in their state. While there has been some concern expressed in the press (Business Week, 7/1/09) as to whether federal stimulus dollars are being spent on state corporate tax breaks, I don't think Congress is going to step in.
Congress already has multistate issues on its plate that it has not be able to resolve in the past 6+ years - (1) updating PL 86-272 and (2) legislation to allow states to collect sales tax from remote vendors.
Perhaps states will move to uniformity given that more are moving to a single sales factor and sourcing sales of services to the market state (which makes sense to do along with a single sales factor if the state is trying to encourage businesses to locate property and payroll in the state). But, when (if) all states have these rules, the economic development aspect of it will be diminished - because all states are then offering the same incentive. So states will then have to find some other incentive to keep and attract businesses. It could be lower rates, more tax credits (such as hiring credits and R&D credits) or even repeal of the corporate income tax.
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The first thing Obama and Clinton neo-liberals did with control of all Congressional and Presidential voting power-----was to spend all that time----2009 bailing out the banks-----and allowed Bush tax cuts to continue to full tax avoidance by the rich and corporations-----2010 taxation went to zero and the rich received a trillion dollars in tax breaks even as Congressional neo-liberals were shouting to TAX THE RICH.
Both neo-liberals and Republicans have as well shouted to REFORM TAXES ESPECIALLY CORPORATE TAXATION. They always start by pretending to be giving main street a tax cut but as with Reagan-----what looked like reduction in taxation was all for the rich and corporations -----while Reagan socked main street with the biggest of tax increases-----that's a Reagan Republican neo-liberal for you. Clinton did the same and Obama is doubling down on ending all global tax breaks with Republicans as they both work for this 21ST CENTURY GLOBAL TAX UNIFORMITY---as global pols pose progressive by saying they are creating policy to tax global corporations with taxes offshore-----they are building US International Economic Zones that will be tax-free to global corporations.
The problem for the American people is this------bringing US tax law to the level of a developing nation has the rich and corporations paying nothing and the people paying lots of taxes. That is the goal with Congressional Republicans and Clinton/Obama neo-liberals shouting for REFORMING THE TAX CODE. They will extend the Federal Uniformity laws to states and localities making only the Federal government tax laws stand-----with the goal having all those Federal laws WRITTEN BY GLOBAL CORPORATE TRIBUNAL----AS WAS TRANS PACIFIC TRADE PACT.
'But the point of crafting new international tax rules is not to punish the business community. It is to even the playing field and ensure predictability and fairness. The OECD's role is to help countries foster economic growth by creating such a predictable environment in which businesses can operate'
This is why at local levels we hear Baltimore Development pols who push all those corporate tax breaks and subsidy now saying they will reduce taxation on citizens and small businesses AND THAT IS NOT TRUE. They will install this International Economic Zone global tax policy.
Bringing International Tax Rules Into the 21st Century
01/02/2014 04:25 pm ET | Updated Mar 04, 2014
It's a watershed moment for international tax policy. The debate over tax evasion by the wealthy and tax avoidance by multinational corporations has never before grabbed so many headlines or caused so much anger. To regain the confidence and trust of our citizens, there is a pressing need for action. To this end, the OECD's work on tax base erosion and profit shifting (BEPS) and automatic exchange of information -- with strong political support from the G20 -- will pave the way for rehabilitating the global tax system.
With understandable fury over tax avoidance by some, finger-pointing and oversimplification can easily happen, shedding more heat than light. Naturally, the business community feels like it's in the cross-hairs. They worry about the impact of new rules, unconstructive tax transparency debates and what the changes will mean for their shareholders, and for their tax obligations.
But the point of crafting new international tax rules is not to punish the business community. It is to even the playing field and ensure predictability and fairness. The OECD's role is to help countries foster economic growth by creating such a predictable environment in which businesses can operate. Today, we see that the rules have not kept up with the realities of doing business in our globalized world. The gaps between domestic tax systems, combined with economic incentives and legal accounting practices have all given rise to the phenomenon of double non-taxation, allowing some multinationals to pay little, or no corporate tax at all.
This has created a chain of interlinked problems which have a detrimental effect on all stakeholders. First, it harms the man on the street: when tax rules allow businesses to shift their income away from where it was produced, it erodes that country's tax base and shifts the burden onto individual taxpayers. Second, it harms governments: when multinationals are not perceived as paying their 'fair share', it undermines the integrity of the entire tax system in the eyes of the public. Additionally, in some countries the resulting lack of tax revenue leads to reduced public investment that could promote growth. Third, it harms other businesses. Domestic firms face the economic burden of higher taxes, while the multinational next door can reduce its taxes by shifting its profits to a low tax jurisdiction. These distortions make it harder for small and family-owned businesses to compete fairly.
That's why the OECD and G20 economies like Brazil, China and India are working together to address BEPS, providing consistency for both business and tax sovereignties. G20 leaders meeting in St. Petersburg endorsed the OECD's Action Plan to address the gaps in the international tax system through BEPS.
G20 leaders also stepped up the fight against offshore tax evasion by establishing automatic exchange of information as the new global standard of tax cooperation. The implementation of this new standard will make it easier for tax authorities to detect undeclared income hidden in foreign accounts or through foreign entities and investments. Foreign bank accounts and other foreign assets will no longer be secret because countries will share this information with each other on a regular basis. The OECD is working with G20 countries to provide the technical standards to make automatic exchange a reality and this includes ensuring the confidentiality of information exchanged.
Taxation remains at the core of countries' sovereignty. But without international, consensus-driven action we risk countries taking unilateral action to protect their tax bases which could easily lead to tax chaos for the global business community. That is why the OECD -- a unique forum for international cooperation and dialogue -- is working with countries around the world to bring the international tax rules into the 21st century.
The time is ripe for the business community and governments to work together to achieve a fairer, more effective and more efficient international tax system that provides a 'win' for everyone.
Pascal Saint-Amans is Director of the Center for Tax Policy and Administration at the OECD.
This blog was originally published on September 17, 2013.
PRETEND THEY CAN IGNORE ENFORCEMENT OF ALL FEDERAL LAWS AND US CONSTITUTIONAL RIGHTS.
This is why these few decades every state has been doing anything it wanted---including all of the frauds against our Federal agencies including Wall Street fraud with the Federal government seeking no justice for citizens. I say this was illegal because the use of Executive Order by a President does not allow such SWEEPING ACTIONS AGAINST OUR FEDERAL LAWS AND US CONSTITUTION. Congress would have impeached or gone to the Supreme Court to stop Clinton, Bush, Obama if they were not global pols. Republican voters at first loved this---but now see the goals are total dismantlement of national and state sovereignty and US Constitutional rights.
Now, how does all this tie to the Doctrine of UNIFORM TAXATION?
I showed yesterday that uniform taxation is in the US AND MARYLAND CONSTITUTIONS. The ignoring by national leaders of this UNIFORM TAXATION created the tax breaks, subsidizing, deregulation of taxation that exists today at national, state, and local levels. Now that this doctrine has been ignored these few decades-------global Wall Street pols and institutions are calling for the repeal of UNIFORMITY TAX LAWS -----that state taxes cannot discriminate between citizens or businesses.
Most American citizens have no idea what abolishing a 'dormant' Commerce Clause Prohibition on Discriminatory Taxation' looks like. It has as a goal allowing the rich and corporations tax anybody anyway they want. These few decades it was used by states to dispense favored tax breaks to corporations and or citizens under the guise of community development. Since Bush and Obama it has meant moving huge sums of Federal funding to selected global corporations as outsourcing and at the local level it is what all of the tax benefit districts and now property tax breaks along with all of the TIFS and corporate tax breaks that filled Baltimore City Hall and Maryland Assembly policy these few decades. It has created huge discriminatory taxation for business, communities, and citizens. Those citizens that liked this and profited from this are now going to join the rest as all of that power to control taxation anyway they want will go to global corporations controlling government sending all tax revenue to corporate subsidy and profit.
AND NONE OF THIS IS LEGAL AND IT IS UNCONSTITUTIONAL AND A POLICY CANNOT SIMPLY GO 'DORMANT' SIMPLY BECAUSE OF ILLEGAL LACK OF ENFORCEMENT OVER A FEW DECADES.
Opening Statement — Edward A. Zelinsky†
The Time Has Come to Abolish the Dormant Commerce Clause Prohibition on Discriminatory Taxation
†The Morris and Annie Trachman Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University; Visiting Professor of Law, Yale Law School
It is time to abolish the dormant Commerce Clause prohibition on discriminatory taxation. Indeed, such abolition is overdue. This prohibition has played a historically important role in implementing the Framers’ vision of the United States as an economically integrated free-trade zone, unimpeded by state barriers to national commerce. However, the prohibition is today doctrinally incoherent and politically unnecessary.
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THIS IS THE NUMBER ONE ISSUE FOR VOTERS IN MOST CITIES INCLUDING BALTIMORE AND I BET NO ONE UNDERSTANDS ALL THIS WAS ALWAYS ILLEGAL UNDER FEDERAL TAX DISCRIMINATION LAWS AND MARYLAND CONSTITUTION PROMOTING TAX UNIFORMITY....CORPORATE TIFS AND TAX BREAKS
Below you see this policy of ignoring the Tax Discrimination laws originates yet again in a Republican think tank. If Republicans are extreme wealth and corporate power----they are going to be more so as they become these global corporations and that is where we are today. Republicans used again the Republican voters wanting to create winners and losers with tax policy across a state like Maryland to deregulate this UNIFORM TAXATION LAW----and now the advantages and power to use it will go to global corporations and the global corporate tribunal deciding policy for all nations tied to international trade policies.
What was used by Baltimore Development to create a tax-free zone downtown while everyone else including small businesses paid more taxes will explode as International Economic Zone policies tied to Trans Pacific Trade Pact are installed.
WE WILL NOT ALLOW THESE POLICIES TO BE INSTALLED AND WILL RETURN TO UNIFORM TAXATION.
Social Democrats created this uniformity and enforced this uniformity law because it kills free market competition-----it has nothing to do with free market tax policy -----and it always ends with the poor,working class, and small business paying more taxes. Remember, the goal of NEW WORLD ORDER is all Americans will be brought to the same levels of poverty as that in Asia through these US International Economic Zones so if you are a tax winner in this game today-----you will join all others in getting soaked with taxation by global corporate tribunal. Think of our Revolutionary War and the motivation-------British royals and East India Corporation were taxing colonists more and more and more -----and that sparked the break and creation of the US and national sovereignty from those global 1%.
THEY ARE BACK AND TRYING TO DO THE SAME THING---ONLY THIS TIME ITS A GLOBAL CORPORATE TRIBUNAL AND A SOVEREIGN UNITED STATES WILL BE TAKEN TO COLONIAL STATUS.
This is a long article but please glance through----citizens in Baltimore will relate to this article from Texas----remember, Texas and Bush neo-cons created these models---and Johns Hopkins and Baltimore Development are Wall Street and neo-conservative.
Tax Increment Financing: A Bad Bargain for Taxpayers
By Daniel McGraw
First published by Reason Magazine, January, 2006
The decision was made easier by the financing plan that Fort Worth will use to accommodate Cabela’s. The site of the Fort Worth Cabela’s has been designated a tax increment financing (TIF) district, which means taxes on the property will be frozen for 20 to 30 years.If you’re imagining an attraction that will draw 4.5 million out-of-town visitors a year, the first thing that jumps to mind probably isn’t a store that sells guns and fishing rods and those brown jackets President Bush wears to clear brush at his ranch in Crawford, Texas. Yet last year Cabela’s, a Nebraska-based hunting and fishing mega-store chain with annual sales of $1.7 billion, persuaded the politicians of Fort Worth that bringing the chain to an affluent and growing area north of the city was worth $30 million to $40 million in tax breaks. They were told that the store, the centerpiece of a new retail area, would draw more tourists than the Alamo in San Antonio or the annual State Fair of Texas in Dallas, both of which attract 2.5 million visitors a year.
Largely because it promises something for nothing—an economic stimulus in exchange for tax revenue that otherwise would not materialize—this tool is becoming increasingly popular across the country. Originally used to help revive blighted or depressed areas, TIFs now appear in affluent neighborhoods, subsidizing high-end housing developments, big-box retailers, and shopping malls. And since most cities are using TIFs, businesses such as Cabela’s can play them off against each other to boost the handouts they receive simply to operate profit-making enterprises.A Crummy Way to Treat Taxpaying Citizens
TIFs have been around for more than 50 years, but only recently have they assumed such importance. At a time when local governments’ efforts to foster development, from direct subsidies to the use of eminent domain to seize property for private development, are already out of control, TIFs only add to the problem: Although politicians portray TIFs as a great way to boost the local economy, there are hidden costs they don’t want taxpayers to know about. Cities generally assume they are not really giving anything up because the forgone tax revenue would not have been available in the absence of the development generated by the TIF. That assumption is often wrong.
“There is always this expectation with TIFs that the economic growth is a way to create jobs and grow the economy, but then push the costs across the public spectrum,” says Greg LeRoy, author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation. “But what is missing here is that the cost of developing private business has some public costs. Road and sewers and schools are public costs that come from growth.” Unless spending is cut—and if a TIF really does generate economic growth, spending is likely to rise, as the local population grows—the burden of paying for these services will be shifted to other taxpayers. Adding insult to injury, those taxpayers may include small businesses facing competition from well-connected chains that enjoy TIF-related tax breaks. In effect, a TIF subsidizes big businesses at the expense of less politically influential competitors and ordinary citizens.
“The original concept of TIFs was to help blighted areas come out of the doldrums and get some economic development they wouldn’t [otherwise] have a chance of getting,” says former Fort Worth City Councilman Clyde Picht, who voted against the Cabela’s TIF. “Everyone probably gets a big laugh out of their claim that they will draw more tourists than the Alamo. But what is worse, and not talked about too much, is the shift of taxes being paid from wealthy corporations to small businesses and regular people.
“If you own a mom-and-pop store that sells fishing rods and hunting gear in Fort Worth, you’re still paying all your taxes, and the city is giving tax breaks to Cabela’s that could put you out of business,” Picht explains. “The rest of us pay taxes for normal services like public safety, building inspections, and street maintenance, and those services come out of the general fund. And as the cost of services goes up, and the money from the general fund is given to these businesses through a TIF, the tax burden gets shifted to the regular slobs who don’t have the same political clout. It’s a crummy way to treat your taxpaying, law-abiding citizens.”
Almost every state has a TIF law, and the details vary from jurisdiction to jurisdiction. But most TIFs share the same general characteristics. After a local government has designated a TIF district, property taxes (and sometimes sales taxes) from the area are divided into two streams. The first tax stream is based on the original assessed value of the property before any redevelopment; the city, county, school district, or other taxing body still gets that money. The second stream is the additional tax money generated after development takes place and the property values are higher. Typically that revenue is used to pay off municipal bonds that raise money for infrastructure improvements in the TIF district, for land acquisition through eminent domain, or for direct payments to a private developer for site preparation and construction. The length of time the taxes are diverted to pay for the bonds can be anywhere from seven to 30 years.
Local governments sell the TIF concept to the public by claiming they are using funds that would not have been generated without the TIF district. If the land was valued at $10 million before TIF-associated development and is worth $50 million afterward, the argument goes, the $40 million increase in tax value can be used to retire the bonds. Local governments also like to point out that the TIF district may increase nearby economic activity, which will be taxed at full value.
So, in the case of Cabela’s in Fort Worth, the TIF district was created to build roads and sewers and water systems, to move streams and a lake to make the property habitable, and to help defray construction costs for the company. Cabela’s likes this deal because the money comes upfront, without any interest. Their taxes are frozen, and the bonds are paid off by what would have gone into city coffers. In effect, the city is trading future tax income for a present benefit.
But even if the dedicated tax money from a TIF district suffices to pay off the bonds, that doesn’t mean the arrangement is cost-free. “TIFs are being pushed out there right now based upon the ‘but for’ test,” says Greg LeRoy. “What cities are saying is that no development would take place but for the TIF.…The average public official says this is free money, because it wouldn’t happen otherwise. But when you see how it plays out, the whole premise of TIFs begins to crumble.” Rather than spurring development, LeRoy argues, TIFs “move some economic development from one part of a city to another.”
OH, YOU MEAN IT WAS ALWAYS ABOUT INSTALLING TAX POLICY IN US INTERNATIONAL ECONOMIC ZONE CITIES LIKE BALTIMORE.
Development Would Have Occurred Anyway
Local officials usually do not consider how much growth might occur without a TIF. In 2002 the Neighborhood Capital Budget Group (NCBG), a coalition of 200 Chicago organizations that studies local public investment, looked at 36 of the city’s TIF districts and found that property values were rising in all of them during the five years before they were designated as TIFs. The NCBG projected that the city of Chicago would capture $1.6 billion in second-stream property tax revenue—used to pay off the bonds that subsidized private businesses—over the 23-year life spans of these TIF districts. But it also found that $1.3 billion of that revenue would have been raised anyway, assuming the areas continued growing at their pre-TIF rates.
The experience in Chicago is important. The city invested $1.6 billion in TIFs, even though $1.3 billion in economic development would have occurred anyway. So the bottom line is that the city invested $1.6 billion for $300 million in revenue growth.
The upshot is that TIFs are diverting tax money that otherwise would have been used for government services. The NCBG study found, for instance, that the 36 TIF districts would cost Chicago public schools $632 million (based on development that would have occurred anyway) in property tax revenue, because the property tax rates are frozen for schools as well. This doesn’t merely mean that the schools get more money. If the economic growth occurs with TIFs, that attracts people to the area and thereby raises enrollments. In that case, the cost of teaching the new students will be borne by property owners outside the TIF districts.
Such concerns have had little impact so far, in part because almost no one has examined how TIFs succeed or fail over the long term. Local politicians are touting TIFs as a way to promote development, promising no new taxes, and then setting them up without looking at potential side effects. It’s hard to discern exactly how many TIFs operate in this country, since not every state requires their registration. But the number has expanded exponentially, especially over the past decade. Illinois, which had one TIF district in 1970, now has 874 (including one in the town of Wilmington, population 129). A moderate-sized city like Janesville, Wisconsin—a town of 60,000 about an hour from Madison—has accumulated 26 TIFs. Delaware and Arizona are the only states without TIF laws, and most observers expect they will get on board soon.
First used in California in the 1950s, TIFs were supposed to be another tool, like tax abatement and enterprise zones, that could be used to promote urban renewal. But cities found they were not very effective at drawing development into depressed areas. “They had this tool, but didn’t know what the tool was good for,” says Art Lyons, an analyst for the Chicago-based Center for Economic Policy Analysis, an economic think tank that works with community groups. The cities realized, Lyons theorizes, that if they wanted to use TIFs more, they had to get out of depressed neighborhoods and into areas with higher property values, which generate more tax revenue to pay off development bonds.
The Entire Western World Could Be Blighted
Until the 1990s, most states reserved TIFs for areas that could be described as “blighted,” based on criteria set forth by statute. But as with eminent domain, the definition of blight for TIF purposes has been dramatically expanded.
THERE IS CLINTON NEO-LIBERALISM MOVING GLOBAL CORPORATE CONTROL FORWARD.
In 1999, for example, Baraboo, Wisconsin, created a TIF for an industrial park and a Wal-Mart supercenter that were built on farmland; the blight label was based on a single house in the district that was uninhabited. In recent years 16 states have relaxed their TIF criteria to cover affluent areas, “conservation areas” where blight might occur someday, or “economic development areas,” loosely defined as commercial or industrial properties.
The result is that a TIF can be put almost anywhere these days. Based on current criteria, says Jake Haulk, director of the Pittsburgh-based Allegheny Institute for Public Policy, you could “declare the entire Western world blighted.”
In the late 1990s, Pittsburgh decided to declare a commercial section of its downtown blighted so it could create a TIF district for the Lazarus Department Store. The construction of the new store and a nearby parking garage cost the city more than $70 million. But the property taxes on the new store were lower than expected, as the downtown area surrounding Lazarus never took off the way the city thought it would. Sales tax receipts were also unexpectedly low. Lazarus decided to close the store last year, and the property is still on the block. Because other businesses were included in the TIF, it is impossible to predict whether the city will be on the hook for the entire $70 million. But given that the Lazarus store was the centerpiece of the development, it is safe to say this TIF is not working very well, and Pittsburgh’s taxpayers may have to pick up the tab.
If businesses like Lazarus cannot reliably predict their own success, urban planners can hardly be expected to do a better job. Typically, big corporations come to small cities towing consultants who trot out rosy numbers, and the politicians see a future that may not materialize in five or 10 years. “The big buzzwords are economic development,” says Chris Slowik, organizational director for the South Cooperative Organization for Public Education (SCOPE), which represents about 45 school districts in the southern suburbs of Chicago, each of which includes at least one TIF. “The local governments see a vacant space and see something they like that some company might bring in. But no one thinks about what the costs might be.…They are giving away the store to get a store.” Big-box retail chains such as Target and Wal-Mart seem to be the most frequent beneficiaries of TIFs. (Neither company would comment for this story, and local politicians generally shied away as well.)
Given the competition between cities eager to attract new businesses, TIFs are not likely to disappear anytime soon. “Has it gone overboard?” asks University of North Texas economist Terry Clower. “Sure.…But the problem is that if a city doesn’t offer some tax incentives, the company will just move down the road.” According to Clower, “In a utopian world, there would be no government handouts, and every business would pay the same tax rate. But if a city stands up and says they aren’t doing [TIFs] anymore, they will lose out.”
Instead, it’s the competitors of TIF-favored businesses that lose out. Academy Sports & Outdoors, which employs 6,500 people, has about 80 sporting goods stores in eight Southern states, including a store in Fort Worth. When the Fort Worth City Council was considering the TIF for Cabela’s, Academy Sports Chairman David Gochman spoke out against the tax incentives, realizing that his company is a big business, but not big enough. “This is not a nonprofit, not a library, not a school,” he said. “They are a for-profit business, a competitor of ours, along with Oshman’s and Wal-Mart and others.”
TIFs Have Become the Standard Handout
Al Dalton, owner of Texas Outdoors, a 10,000-square-foot hunting and fishing shop in Fort Worth, echoed the sentiment that the city was favoring one business over another. “We don’t have the buying power, and we don’t have the advertising dollars,” Dalton said. “It doesn’t make any difference even if we’ve got the best price in town if nobody knows about it. The deep pockets, in every way, [make] a lot of difference.”
And that may be the key to understanding how TIFs are now applied: The companies with the deep pockets are able to fill them with subsidies.
The Cabela’s location in Fort Worth does not fit any of the blight criteria people had in mind when TIFs were first created. The 225,000-square-foot store, with its waterfalls, multitude of stuffed animals, and wild game café, sits on prime property just off Interstate 35. It is a few miles down the road from the Texas Motor Speedway (which has its own TIF), and the 200,000 NASCAR and IRL fans who attend races there three times a year—not to mention the fans who come to the speedway’s concerts and other special events—might want to shop at Cabela’s.
The area around Cabela’s is affluent and has been growing for years. A half-dozen shopping centers nearby were on the drawing board well before the TIF was considered. Within a five-mile radius of the hunting/fishing megastore, 10,000 new homes have been built since 2000. That same area is expected to grow by 20,000 people in the next two years.
But the argument against the “but for” assumption is not being heard. In 2004 a state judge threw out a lawsuit against the Cabela’s TIF by a Fort Worth citizens’ group that claimed blight was never proven, and that the city was misusing TIFs in a prosperous area that needed no tax breaks for future development. The blight designation came from a pond and stream on the property. It was an odd designation, given that the property is in a prime development area and ponds and streams are not what one would classify as blighted.
The press releases and newspaper articles about the new Cabela’s emphasize that the store is going to draw more people to Texas than visit the Alamo (the studies were done by Cabela’s). The press release never mentions that a Bass Pro Shop store, part of a chain almost identical to Cabela’s, is just 10 miles down the road. While Cabela’s was negotiating its TIF with Fort Worth, it was also negotiating a TIF with the city of Buda, 120 miles away, outside of Austin. Cabela’s got about $20 million from Buda, and the same tourist claims are being made there. If each Texas store is going to draw 4.5 million tourists, as the chain claims, that means 9 million people will be coming to Texas every year just to visit the two Cabela’s stores.
“The notion that a hunting store would draw all these tourists is ridiculous,” says Greg LeRoy. “But what is even more ridiculous is cities thinking that tax breaks are the primary reason businesses relocate or expand in certain areas. There are so many other factors at play—transportation costs, good employment available, housing costs and quality of life for executives—that the tax breaks like TIFs aren’t very high up on their priority list. But these corporations are asking for them—and getting them—because everyone is giving them out. TIFs have become the standard handout, and the businesses have learned how to play one city off the other. Businesses would be stupid for not asking for them every time.”
If TIFs continue to multiply at the present rate, we may see the day when every new 7-Eleven and McDonald’s has its own TIF. That prospect may seem farfetched, but it wasn’t too long ago that cities wouldn’t even have considered giving up tens of millions of dollars in exchange for yet another store selling guns and fishing rods.
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The US Constitution was written geared to commerce activity within the US and it created special powers of the Federal government in regards to foreign commerce. Federal commerce laws trump state's rights in foreign trade. All of the freedom from tax discrimination laws states were allowed will now end because----International Economic Zones in the US will still be considered FOREIGN COMMERCE and states and localities will not be able to control or place taxes on global corporations operating in those zones.
This will mean that all of those global corporations planned to fill Baltimore as an International Economic Zone will never pay taxes but as we already see-----taxation on everyone else will soar. State's rights Republicans are shouting against this and calling for impeachment and calling all this unconstitutional ----AND THEY ARE RIGHT------but they are also the ones that drove the deregulation of us of this clause-----weakening it enough for global corporations to simply PRETEND THEY CAN IGNORE IT NOW.
This is the point------the US Constitution would never allow the corporate monopolies that were US corporations and it certainly does not allow for global corporate monopolies in the US. The Constitution does not allow the designation of US cities or counties as A FOREIGN ECONOMIC ZONE having the goal of allowing global corporations to operate OUTSIDE OF US CONSTITUTIONAL AND FEDERAL LAWS. That goes for state and local laws as well----and it pertains to this UNIFORM TAXATION.
Uniformity Clause...all Duties, Imposts and Excises shall be uniform throughout the United States....
Article I, Section 8, Clause 1Teacher's Companion Lesson (PDF)
Among the unsatisfactory aspects of the Confederation government were its inability to regulate interstate and foreign commerce and its weak powers of taxation. The Constitution cured these defects, but thereby created a new danger: the greatly strengthened national government might abuse its powers by oppressing politically weaker groups and strangling the economic activity that the Framers hoped to promote.
At the Constitutional Convention, the Uniformity Clause was initially joined with what is now the Port Preference Clause (Article I, Section 9, Clause 6), which forbids Congress to give preferences "by any Regulation of Commerce or Revenue" to the ports of one state over those of another. Along with other provisions restricting congressional power over taxes and commercial regulations, these two were designed to forestall economically oppressive discrimination. The Port Preference Clause limits both the commerce and taxing powers, whereas the Uniformity Clause applies to the taxing power alone. Their common origin, however, is a sign of their common purpose: each was meant to prevent geographic discrimination that would give one state or region a competitive advantage or disadvantage in its commercial relations with the others.
Because the goods and activities that can be taxed are distributed unequally through the country, virtually all duties, imposts, and excises have nonuniform effects. A tax on oil production, for example, will affect certain regions more severely than others. Because the Constitution expressly empowers Congress to levy these taxes, it must also permit some of the nonuniform effects that inevitably accompany them. The principal challenge in interpreting the Uniformity Clause is to distinguish between the kind of nonuniformity that is forbidden by the Constitution and the inevitable nonuniform effects that accompany legitimate duties, imposts, and excises.
In its earliest exposition, the Supreme Court declared that a tax is uniform if it "operates with the same force and effect in every place where the subject of it is found." Edye v. Robertson (1884). This rule correctly recognized that the Uniformity Clause was meant to forbid geographically nonuniform taxes without outlawing all geographically nonuniform effects. But the formula is inadequate, because it does not describe the limits on Congress's discretion to define the "subjects" of taxation. Suppose, for example, that Congress chose to define the subject of an excise tax as "oil produced in Alaska." The rule would be formally satisfied, but the most flagrant geographic discrimination would be possible.
In United States v. Ptasynski (1983), a unanimous Court concluded (1) that any tax in which the subject is defined in nongeographic terms satisfies the Uniformity Clause, and (2) that where the subject is defined in geographic terms, the tax will be scrutinized for "actual geographic discrimination."
The first part of this test creates a very large safe harbor for discriminatory taxes, which can almost always be framed without using overtly geographic terminology (for example, "oil whose production might affect caribou populations"). Nor is it clear that the second part of the test puts any real limit on Congress's power to impose discriminatory and oppressive taxes, for the Court nowhere defined "actual geographic discrimination." In fact, the Court went out of its way to emphasize that review of statutes using geographic terminology would be highly deferential. With no promise of effective judicial enforcement, the Uniformity Clause has, at least for the present, apparently been rendered nugatory, save for Congress's own sense of its obligations under the Constitution.
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Below you see the drive to UNIFORMITY at the state level driven by interstate commerce--------but as this title shows-----21st century taxation------this is driven by global policy that will have all states with the same tax policies and a global corporate tribunal controlling those Federal laws. States are crying foul to have Federal government tell them how to tax----and now they are fighting the Federal UNIFORMITY TAX LAWS thinking this will stop it-----what do global corporations want states to do? GET RID OF THIS CONSTITUTIONAL UNIFORMITY LAW.....this is how global pols always use small businesses and states to fight to get rid of Federal policies that are what would fight against the International Economic Zone policy allowing all US Constitutional rights and laws be ignored.
REMEMBER, THE GOAL OF GLOBAL CORPORATIONS IS TO USE TAX LAW GLOBALLY AND THEY WILL SET THE TAX RATE AT THE FEDERAL LEVEL FOR TAXATION IN ALL INTERNATIONAL ECONOMIC ZONES IN THE US AND ALL OTHER NATIONS TIED TO INTERNATIONAL TRADE PACTS.
This will remove all taxation from global corporations and 'progressively' move more and more taxation downward. See the use of progressive======it is not the social democratic progressive that has taxation on rich and corporations higher.
These changes are not motivated by US corporations doing business across state lines----it is about global corporations operating the same across the US and operating the same across nations tied to International Trade Pacts.
If your Maryland Assembly pols respond with shouts to GET RID OF UNIFORMITY TAXATION CLAUSE-----they are working for global corporations to install global tax policy----not to protect the state and citizens rights.
21st Century Taxation
This blog by a tax professor is about tax reform and moving tax systems into the 21st century. It focuses on tax system weaknesses, critiques selected reform proposals, and offers new ideas, with an emphasis on federal, California and multistate matters. Additional information - articles, reports and links, can be found at the 21st Century Taxation website (see link below right). I welcome your comments.
Search This BlogTuesday, July 7, 2009
Uniformity of State Tax Laws - Possible? Desired?
When businesses operate in more than one state, the question arises as to how to determine how much of its income should be subject to tax in each state in which it is subject to tax. This is a matter that has been argued at the Supreme Court level numerous times and states have modified their approaches over the years.
Decades ago (1957), the National Conference of Commissioners on Uniform State Laws (NCCUSL) drafted the Uniform Division of Income for Tax Purposes Act (UDITPA). It was last amended in 1966. UDITPA provides rules on apportionment and allocation of multistate business income among states.
In 2007, NCCUSL decided to form a committee to look at changes to update UDITPA. Section 17 of UDITPA which deals with sourcing of sales that are not of tangible property was to be a focal point, but other areas could be looked at as well. Section 17 was clearly outdated. UDITPA provides that sales of tangible personal property are sourced to the destination state. Section 17 uses a costs of performance sourcing rule meaning that typically, sales of services and intangibles are sourced to the origin state. Several states including California have modified their laws to source services to the market (destination) state.
The Committee held its first meeting in late May 2008. There were protests by some businesses urging NCCUSL to terminate the project (see letter submitted by COST and a business coalition). Yet, others supported the project (see, for example, letter from Utah).
Uniformity among states cannot be guaranteed through a UDITPA revision though because states are not required to adopt the Act.
Well, on June 30, the committee voted to recommend termination of the project. Basically, it doesn't meet the goals for a uniform law if it is unlikely that any state is going to adopt the model law.
So, does this mean that Congress might step in?
I doubt it. If Congress took on how to source and apportion income among the states, there would be long debate among members of Congress, the business community and state governments (and some academics, of course) as to what the uniform rule should be. I think Congress is well aware that the states are struggling with how much to tax businesses versus how much to incentivize them to locate or stay in their state. While there has been some concern expressed in the press (Business Week, 7/1/09) as to whether federal stimulus dollars are being spent on state corporate tax breaks, I don't think Congress is going to step in.
Congress already has multistate issues on its plate that it has not be able to resolve in the past 6+ years - (1) updating PL 86-272 and (2) legislation to allow states to collect sales tax from remote vendors.
Perhaps states will move to uniformity given that more are moving to a single sales factor and sourcing sales of services to the market state (which makes sense to do along with a single sales factor if the state is trying to encourage businesses to locate property and payroll in the state). But, when (if) all states have these rules, the economic development aspect of it will be diminished - because all states are then offering the same incentive. So states will then have to find some other incentive to keep and attract businesses. It could be lower rates, more tax credits (such as hiring credits and R&D credits) or even repeal of the corporate income tax.
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The first thing Obama and Clinton neo-liberals did with control of all Congressional and Presidential voting power-----was to spend all that time----2009 bailing out the banks-----and allowed Bush tax cuts to continue to full tax avoidance by the rich and corporations-----2010 taxation went to zero and the rich received a trillion dollars in tax breaks even as Congressional neo-liberals were shouting to TAX THE RICH.
Both neo-liberals and Republicans have as well shouted to REFORM TAXES ESPECIALLY CORPORATE TAXATION. They always start by pretending to be giving main street a tax cut but as with Reagan-----what looked like reduction in taxation was all for the rich and corporations -----while Reagan socked main street with the biggest of tax increases-----that's a Reagan Republican neo-liberal for you. Clinton did the same and Obama is doubling down on ending all global tax breaks with Republicans as they both work for this 21ST CENTURY GLOBAL TAX UNIFORMITY---as global pols pose progressive by saying they are creating policy to tax global corporations with taxes offshore-----they are building US International Economic Zones that will be tax-free to global corporations.
The problem for the American people is this------bringing US tax law to the level of a developing nation has the rich and corporations paying nothing and the people paying lots of taxes. That is the goal with Congressional Republicans and Clinton/Obama neo-liberals shouting for REFORMING THE TAX CODE. They will extend the Federal Uniformity laws to states and localities making only the Federal government tax laws stand-----with the goal having all those Federal laws WRITTEN BY GLOBAL CORPORATE TRIBUNAL----AS WAS TRANS PACIFIC TRADE PACT.
'But the point of crafting new international tax rules is not to punish the business community. It is to even the playing field and ensure predictability and fairness. The OECD's role is to help countries foster economic growth by creating such a predictable environment in which businesses can operate'
This is why at local levels we hear Baltimore Development pols who push all those corporate tax breaks and subsidy now saying they will reduce taxation on citizens and small businesses AND THAT IS NOT TRUE. They will install this International Economic Zone global tax policy.
Bringing International Tax Rules Into the 21st Century
01/02/2014 04:25 pm ET | Updated Mar 04, 2014
- OECD Organization for Economic Cooperation and Development
It's a watershed moment for international tax policy. The debate over tax evasion by the wealthy and tax avoidance by multinational corporations has never before grabbed so many headlines or caused so much anger. To regain the confidence and trust of our citizens, there is a pressing need for action. To this end, the OECD's work on tax base erosion and profit shifting (BEPS) and automatic exchange of information -- with strong political support from the G20 -- will pave the way for rehabilitating the global tax system.
With understandable fury over tax avoidance by some, finger-pointing and oversimplification can easily happen, shedding more heat than light. Naturally, the business community feels like it's in the cross-hairs. They worry about the impact of new rules, unconstructive tax transparency debates and what the changes will mean for their shareholders, and for their tax obligations.
But the point of crafting new international tax rules is not to punish the business community. It is to even the playing field and ensure predictability and fairness. The OECD's role is to help countries foster economic growth by creating such a predictable environment in which businesses can operate. Today, we see that the rules have not kept up with the realities of doing business in our globalized world. The gaps between domestic tax systems, combined with economic incentives and legal accounting practices have all given rise to the phenomenon of double non-taxation, allowing some multinationals to pay little, or no corporate tax at all.
This has created a chain of interlinked problems which have a detrimental effect on all stakeholders. First, it harms the man on the street: when tax rules allow businesses to shift their income away from where it was produced, it erodes that country's tax base and shifts the burden onto individual taxpayers. Second, it harms governments: when multinationals are not perceived as paying their 'fair share', it undermines the integrity of the entire tax system in the eyes of the public. Additionally, in some countries the resulting lack of tax revenue leads to reduced public investment that could promote growth. Third, it harms other businesses. Domestic firms face the economic burden of higher taxes, while the multinational next door can reduce its taxes by shifting its profits to a low tax jurisdiction. These distortions make it harder for small and family-owned businesses to compete fairly.
That's why the OECD and G20 economies like Brazil, China and India are working together to address BEPS, providing consistency for both business and tax sovereignties. G20 leaders meeting in St. Petersburg endorsed the OECD's Action Plan to address the gaps in the international tax system through BEPS.
G20 leaders also stepped up the fight against offshore tax evasion by establishing automatic exchange of information as the new global standard of tax cooperation. The implementation of this new standard will make it easier for tax authorities to detect undeclared income hidden in foreign accounts or through foreign entities and investments. Foreign bank accounts and other foreign assets will no longer be secret because countries will share this information with each other on a regular basis. The OECD is working with G20 countries to provide the technical standards to make automatic exchange a reality and this includes ensuring the confidentiality of information exchanged.
Taxation remains at the core of countries' sovereignty. But without international, consensus-driven action we risk countries taking unilateral action to protect their tax bases which could easily lead to tax chaos for the global business community. That is why the OECD -- a unique forum for international cooperation and dialogue -- is working with countries around the world to bring the international tax rules into the 21st century.
The time is ripe for the business community and governments to work together to achieve a fairer, more effective and more efficient international tax system that provides a 'win' for everyone.
Pascal Saint-Amans is Director of the Center for Tax Policy and Administration at the OECD.
This blog was originally published on September 17, 2013.
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