Monday, December 08, 2003

Time for a Toycott?

Speaking of taxes, in this time of tight budgets and lean economic times, one would hope that we could all pull together and pay our fair share. Unfortunately, some of the corporations doing business in Maryland, including Toys R Us, have cheated Maryland out of some $70 million in back taxes by setting up shell "holding companies" in Delaware. This scandal harkens back to Enron's tax games in the Cayman Islands. These mega-corporations spend millions of dollars to avoid the taxes they are legally required to pay, putting locally-owned businesses at a disadvantage, and depriving Marylanders of revenue desperately needed to run the State.

The Maryland Court of Appeals has held that the profits of holding companies like these are taxable by Maryland, but the "lowest common denominator" business climate that Delaware has set up to collect incorporation fees, and deprive other states of tax revenue, represents a serious problem for states all around the country. The strategy of getting ahead by undermining the rules and regulations that the rest of us have put in place is akin to the current incarnation of global "free trade", a race to the bottom, where companies without worker protections and environmental regulations are "rewarded" with exploitative manufacturing operations.



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