HB 769/SB 1144 would stop global corporations from using shell games to dodge taxes, level the competitive playing field for small businesses, and raise revenue to help everyday Floridans.
Orlando, Fla. – Rep. Anna V. Eskamani and Senator Geraldine Thompson have filed legislation to close corporate tax loopholes and ensure that the world’s biggest and most profitable companies pay their fair share of Florida taxes.
The bill (HB 769 / SB 1144) would end Florida’s practice of letting giant corporations pretend to be smaller companies when it comes time to pay state taxes on their profits.
Known as “separate reporting,” this badly outdated and easily exploited system allows big corporations to file different tax returns for each of their many subsidiaries. Separate reporting makes it very easy for companies like the Walt Disney Co., Target Corp., and Chevron Corp. to dodge Florida by moving their money through a corporate maze.
Instead, this legislation would require these big corporations to file a single, unified tax return covering their entire business – just like the single, unified businesses these companies really are.
This is known as “combined reporting.” And combined reporting prevents corporations from using tax-avoiding accounting tricks, like having one subsidiary pay another for the right to use the company’s name and logo.
More than half of the states in the country already require combined reporting for corporate income taxes, which provides a much more accurate picture of a corporation’s total profit – and its true tax obligation.
Florida’s antiquated system of separate reporting currently allows corporations to skip out on $500 million a year in state taxes, according to estimates by independent economists.
The lack of combined reporting is the main reason Florida has one of the easiest-to-avoid corporate taxes in the country – a tax so ridden with loopholes that only 1 percent of companies pay anything at all.
It’s also why Florida has one of the most unfair tax systems in the country – a tax system that punishes the working poor and middle class, while coddling corporations and the super-rich. Florida households in the bottom 20 percent of income pay a total state tax rate that is more than five times higher than the tax rate paid by the wealthiest 1 percent.
The money raised by combined reporting could be used to help the 900,000 or more Floridians who are about to have their health insurance taken away by the DeSantis administration. It could be used to invest more in pre-kindergarten, which is one of the worst-funded and lowest-quality pre-K programs in the country. Or it could be used to deliver more tax relief to everyday Floridians – the people who have been forced to shoulder more of the tax load because big corporations have been ducking out for years.
But combined reporting is not just about raising money for important needs. It’s also about helping our small, Florida-based businesses, who must compete with these giant multinational corporations – but who don’t have teams of lobbyists, accountants and lawyers helping them hide profits in places like Delaware, Ireland and the Cayman Islands. Combined reporting would put all businesses, big and small, on an equal playing field.
Here’s Representative Eskamani’s Statement:
“The GOP likes to talk a big game about corporate accountability and creating an ‘even playing field’ for big businesses — and now it’s time to prove it. Combined reporting is a good policy that 28 states have already implemented that would put an end to the shell games Florida’s largest corporations play to dodge taxes and give themselves an unfair advantage. Close the loophole and our Florida based businesses will thrive while we generate revenue to pay for essential needs like disability services and teacher pay. It’s a win, win win for the people of Florida and small businesses.”
Here’s Senator Geraldine Thompson’s Statement:
“Florida should follow the lead of numerous states that are adopting combined reporting which treats parent companies and subsidiaries as one corporation for state income tax purposes. Nationwide profits would be combined and Florida would then tax the combined income. Many corporations in Florida have engaged in tax avoidance and artificially moved profits out of the state and into states in which they will be taxed at lower rates—or not at all. We need to finance services such as education, health care and social justice initiatives.”