Minding their business.

• Author: Mooneyham, Scott
• Position: CAPITALGOODS

In each of the last three legislative sessions, lawmakers have tightened down on the rules that let the tax man go after recalcitrant corporate taxpayers. A lot of those corporations would dispute that "recalcitrant" characterization, which is one reason they have wanted to change the rules. In each case, they've invoked the mantra of tax fairness when demanding new ones. Though the rules might not always have been applied fairly, there is quite a bit of evidence, documented in court cases that went in the state's favor, that some big multistate corporations have shifted income earned in North Carolina to states such as Delaware that don't have corporate-income taxes to reduce what they owed here.

[ILLUSTRATION OMITTED]

Let's cut through the posturing: Nobody--not me, not you, not the mechanic down the street and certainly not the chief executives of big-box retailers--enjoys paying taxes. As conservative pundit John Hood wrote a couple of years ago, "The truth is that any officer of a corporation who fails to structure his business under the law to maximize profits and minimize tax liabilities is in violation of his responsibility to his shareholders." The truth also is that corporate officers spend a lot of money employing lobbyists to influence how laws are written to minimize tax liabilities.

In 2010, those efforts involved legislation ordering the state Department of Revenue to come up with stricter guidelines for when it decides to impose penalties on corporate taxpayers. Last year, legislators rewrote the law that allows state tax collectors, when they suspect income shifting, to consider a multistate company's total income and apportion an amount that was earned here. The changes permit the department to pursue consolidated returns only when it can be shown there was no "reasonable business purpose" for shifting income. This year, lawmakers have been considering legislation that would put the yoke of the state's formal and lengthy rulemaking process on the department as to when it can order a consolidated return. Right now, the agency can issue a quick directive, independent of outside review, spelling out how it will enforce the law.

See a trend here? Legislators, whether the new Republican majority or the Democrats just before they lost their majority, have been swayed by arguments that the state needs to be more sympathetic to the corporate taxpayer. Maybe that's because they keep getting hit over the head, time and again, with...