WHEREAS:
Multinational corporations have been able to avoid paying their fair share of state taxes under the arm's length or the separate accounting method of apportioning corporate income by shifting profits to subsidiaries that are beyond the taxing authority of a state; and
WHEREAS:
The worldwide unitary method of taxation closes this "subsidiary loophole" by treating integrated subsidiaries of corporations as a single business entity for taxing purposes. The worldwide unitary method apportions the worldwide income of integrated business operations to each state based on the share of the business' worldwide sales, employment and property in that state; and
WHEREAS:
The U. S. Supreme Court in its Container Corporation decision ruled that the worldwide unitary method was a proper, fair and constitutional way to apportion the income of corporations. In reaching its decision, the Supreme Court rejected the claims of multinational corporations that the worldwide unitary method distorted the allocation of profits or that it heightened the risk of double taxation; and
WHEREAS:
When multinational corporations are allowed to use their foreign subsidiaries to shelter income they earn in a state, then other taxpayers — smaller in-state businesses, wage earners, consumers and homeowners — bear an unfair burden of taxes; and
WHEREAS:
The worldwide unitary method has a proven track record in twelve states, including California and Massachusetts. The record shows that the worldwide unitary method insures that multinational corporations pay only their fair share of taxes, without perceivable harm to the state's economic development; and
WHEREAS:
Multinational corporations are now engaged in a public relations and political campaign to discredit the states' use of the worldwide unitary method because of its I anti-business' effects, even as they continue to heavily invest in states that use the worldwide unitary method. The formation of the Federal Treasury Department's Working Group on Unitary is one example of how multinational corporations have succeeded in pressuring politicians into considering limitations on the use of the worldwide unitary method.
THEREFORE BE IT RESOLVED:
That AFSCME strongly endorses states' use of the worldwide unitary method to insure the fair taxation of multinational corporations; and
BE IT FURTHER RESOLVED:
That AFSCME deplores any actions by the Federal Government or Congress to restrict the right of states to use the worldwide unitary method; and
BE IT FURTHER RESOLVED:
That AFSCME calls on the U.S. Treasury Department to undertaken an in-depth study of whether the Federal Government should adopt the worldwide unitary method as an alternative to the ineffective arm's-length standard currently employed under the federal corporate income tax.
SUBMITTED BY:
International Executive Board