Corporate Tax

When the chairman of the Greater Baltimore Committee mulled the challenges facing the region's economy, from urban blight to public education, he chose one above all the rest. The focus of the business community, announced Atwood "Woody" Collins III, who is M&T Bank's Mid-Atlantic president as well as GBC chairman, should be on transportation. Right on. Transportation - especially access to public transit - is often the critical factor for businesses looking to relocate or expand. Small wonder.

ANNAPOLIS -- The House of Delegates passed a bill yesterday that closes a corporate tax loophole and dedicates most of the money to school construction. A leadership priority, the bill would require corporations to pay transfer taxes and recording fees when they sell real estate. The bulk of the money raised, about $45 million a year, would go back to the counties for school construction. An amendment approved this week dedicates the state portion of the money, about $12 million annually, for land preservation.

Democrats in the House of Delegates agreed yesterday to alter one of their signature proposals for the current Assembly session - the closing of a corporate tax loophole - co-opting a Republican strategy. House Speaker Michael E. Busch's top priority this year is a bill that would keep some corporations from avoiding transfer taxes when they sell real estate. Busch wants limited liability corporations to pay the tax, with the proceeds dedicated to school construction - a huge need in the state.

WHAT DO drug-maker Pfizer, technology-marketer Hewlett-Packard and consumer-products giant Procter & Gamble have in common? Each of these corporate kings has billions of dollars in foreign profits parked overseas that it can bring back to the United States this year at a rock-bottom tax rate under the "American Jobs Creation Act of 2004." And with each, there have been reports of likely sizable layoffs. So much for creating jobs - and for truth in tax-cutting. By the time this act was passed last October, an orgy of Washington lobbying had turned it into an astonishing example of corporate pork, with $137 billion in business tax cuts over a decade - cuts for ceiling-fan importers, NASCAR track owners, architects, tobacco farmers and almost any entity claiming to be a manufacturer.

SOMEBODY SMASHES your car windshield to steal the quarter sitting on the dashboard. He's 25 cents richer, but you're out 500 bucks. A fair transaction? Apparently, it's not a problem for authorities in Delaware. Yes, that's right, our neighbors to the east seem to have the instincts of a second-rate criminal -- at least when it comes to business dealings. Recently, Delaware created a new type of corporate tax dodge that is breathtaking in its audacity. Its sole purpose? To help large companies hide profits from states like Maryland.

WASHINGTON - While public-interest groups were deriding billions of dollars in business tax breaks approved by the Senate this week, Maryland horse racing executives celebrated a provision that could significantly boost foreign betting at U.S. tracks. It goes to show that one person's "pork" is another person's "perk." The provision - one of at least a half-dozen in the bill affecting sports - eliminates a 30 percent withholding tax that foreigners must pay on winning wagers into U.S. horse-track betting pools.

For years, Baltimore-based architecture and design firm RTKL Associates earned about 15 percent of its profits from overseas projects tax-free, thanks to a federal export subsidy designed to help U.S. firms compete abroad. Then the World Trade Organization declared the subsidy illegal, leaving RTKL and thousands of other U.S. firms wondering what would happen to their profits from overseas business. They got their answer this week when Congress declared RTKL - a firm that makes most of its money turning out drawings and plans - a U.S. manufacturer deserving of a tax break.

THE American Jobs Creation Act of 2004, just passed by Congress and likely to be signed by President Bush, ought to be called the "American Corporate Pork Act of 2004." Hardly any corporate special interests, it seems, walked away from this stunning boondoggle without a tax cut - after what's been described as an orgy of lobbying. The beneficiaries include ceiling-fan importers; foreign gamblers; railroads; certain shopping-center developers; NASCAR track owners; Native Alaskan whalers; producers of methanol and movies; cruise-ship operators; the makers of ships, aircraft, drugs, arrows and fishing-tackle boxes; and on and on. General Electric alone is expected to receive $9 billion in tax cuts from this bill.

WASHINGTON - The Senate moved yesterday toward approval of a sweeping corporate tax overhaul - one of a series of measures with broad appeal to key constituencies that lawmakers are expected to pass before wrapping up their pre-election session this week. During an unusual Sunday session, the bill cleared a procedural hurdle when the Senate voted 66-14 to limit debate, paving the way for final passage today of the measure, which would provide almost $136 billion in tax breaks for businesses.

IT'S DIFFICULT to stomach the news that Gov. Robert L. Ehrlich Jr. is contemplating a $55 million tax break for out-of-state corporations. This is the same governor who wants to reduce state employee health benefits and has left safety-net agencies perilously underfunded. These are lean times for state government, Mr. Ehrlich often reminds us, and yet he wants to "gut" a law that prevents big companies from avoiding their fair share of taxes. Who says it's an evisceration? That's the view of none other than Comptroller William Donald Schaefer, who seems to have only recently noticed that Mr. Ehrlich has some brutal budget-balancing plans for state agencies.