Big Business And Tax Avoidance

We have all heard of the many things that corporations do to try and avoid paying their fair share of federal income taxes. Some corporations are so successful in this that they wind up paying very little or no income taxes at all. What many don't know is that these big businesses are trying the same thing on the state level.

Texas doesn't have a state income tax. Texas raises its funds mainly through a very regressive state sales tax and through property taxes. Although many businesses brag about how much they bring in for the state through the sales tax, the truth is that it is not business that pays the bulk of this tax -- it is the consumer.

The tax that hits business the hardest in Texas is the property tax. After all, most big businesses own the property that their business sits on. It should come as no surprise that this is the tax that business fights the hardest in Texas.

Most corporations (and some home owners) are paying less in property taxes this year. That is because the Republican leadership in this state cut property taxes in the last legislative session to help their corporate buddies. You didn't actually think they did that for home owners, did you? While home owners got a small tax cut, the cut added up to big money for the corporations.

But that was not good enough for the corporate powers that be. A new study shows that most large businesses in Texas challenge their property tax appraisals EVERY YEAR. Take Wal-Mart for example. At least 83% of their stores in Texas challenge their appraisals, compared to 35% of their stores in other states.

These corporations just consider this to be good business practice. Even if they are unable to get their appraisal lowered in a certain year, it serves notice on appraisal districts that they will fight every year and inhibits the willingness of these districts to raise their appraisals for these businesses.

They do this in spite of the fact that most are appraised too low, because the appraisal districts do not have access to the sale price of the property. These districts can easily find the sale price of a home because that is public record, but the sale price is usually excluded in huge corporate deals and there is no state law that requires them to reveal it.

Of course, the corporations will tell you they fight the property taxes because Texas has one of the highest propety taxes in the nation. That is true. But what they don't tell you is that when all taxes are considered, Texas is in the lowest one-quarter of states in terms of total taxes.

Texas could pass a state income tax and lower its property taxes, but most Texans would not support that, and these same businesses would then search for ways to avoid the income tax (as they do on the federal level). The truth is that they just don't want to pay taxes.

No one enjoys paying taxes, but most of us recognize that they are necessary to fund required government functions. Even big business would admit that taxes are necessary -- they just want the burden to fall on the middle and working classes, and not on the rich and the corporations (where it belongs).