Nothing is certain about corporate breadth & taxes.

• Author: Gray, Tim
• Position: North Carolina's bid to tax financial services companies with limited physical presence in state

American Express Corp. isn't based in North Carolina. But that hasn't stopped the financial-services company from finding a friend in the General Assembly.

Rep. Billy Creech is doing its bidding on a measure that pits the New York-based company against the state Revenue Department. The Clayton Republican has blocked Revenue from collecting income tax from financial companies with a limited physical presence - but lots of customers - here. He says he was alerted to the issue by "a lobbyist for American Express," whom he won't name. Aware just how bad that sounds, Creech volunteers that he was also approached by "several large North Carolina companies." He won't name them either.

Why would North Carolina companies complain about out-of-state companies being taxed? After all, that would mean lower taxes, on average. In this case, those North Carolina companies likely are out-of-state companies. Rumor in Raleigh is they're banks that have credit-card subsidiaries based outside the state. NationsBank Corp. and Wachovia Corp., for instance, have theirs in Delaware, which taxes credit-card income at a lower rate. Officially, the Revenue Department will say only that it aims to tax any lender that does lots of business in North Carolina, no matter where it's based.

For two years, the department has been trying to make its new rule stick. Meantime, the two sides have been involved in a Capital City chess game, wielding lawyers and legal briefs the way Gary Kasparov pushes rooks and knights. Creech is little more than a pawn. Lots of tax and legal arcana undergird the match, but, basically, Revenue has changed its mind about who should pay North Carolina corporate income tax.

Not surprisingly, the financial companies don't like that much. If the department wins, they'll end up with bigger tax bills. The Office of State Budget and Management estimates $56 million more, plus $6.8 million in compliance costs. Yet AmEx spokeswoman Susan Miller insists "it's the principle," not the fear of more taxes, that motivates her company's lobbying. AmEx has 2,800 employees at a Greensboro service center, so it's already paying corporate income tax here. But if Revenue wins, it could set a precedent for other states.

AmEx aside, Revenue has other lenders so scared that they won't comment on the issue. (As former U.S. Supreme Court Chief Justice John Marshall said, "The power to tax involves the power to destroy.") But they've brought in out-of-state frontmen to...