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MOTORS, INTERNATIONAL PAPER, AND KIMBERLY-CLARK
July 30, 2012
Californians to Close the Out of State Corporate Tax Loophole
Summary Currently in California, there is a corporate tax loophole that allows out-of-state corporations to avoid paying millions of dollars of taxes, while making millions of dollars in profits from Californians and employing very few Californians. The same companies that are fighting to preserve this loophole are earning millions of dollars from sales to California state agencies. This corporate tax loophole is specifically designed so that the fewer Californians these out-of-state-companies employ, the less they pay in taxes. The Legislative Analyst’s Office estimates that the loophole allows corporations to dodge roughly $1 billion in California taxes, forcing California businesses and taxpayers to pick up the tab at a time when California’s state and local government agencies and schools have been forced to make massive budget cuts due to dwindling revenues. The loophole, which gives companies an option of calculating their income based on a mixture of payroll, property, and sales, gives multi-state corporations an incentive to keep jobs and investment in other states so that they can reduce their taxes in California. In other words, California state law rewards companies for creating jobs outside of California and puts job-creating California companies at a competitive disadvantage. The tax loophole was created in the dead of the night in a backroom Sacramento deal with no debate or disclosure in 2009. To this day, no one has taken responsibility for inserting the massive loophole into state law. However, there are several community leaders and lawmakers who are interested in eliminating the tax loophole by requiring out-of-state companies to pay taxes based on one factor -- their sales in California -instead of giving them a choice between sales, property, and payroll. The Mandatory Single Sales Factor would prohibit multi-state companies from reaping profits on their sales in California while dodging their fair share of California state taxes. By reducing the incentive to locate new jobs out of state, the Legislative Analyst’s Office predicts that the mandatory single sales factor will create 40,000 jobs in California. The states of Colorado, Georgia, Illinois, Indiana, Iowa, Maine, Michigan, Nebraska, New York, Oregon, South Carolina, Texas and Wisconsin have all adopted a mandatory single sales factor approach – without a loophole – to provide an incentive to companies to invest in state. Only California and one other state – Missouri – have this glaring loophole. As time has passed and multiple attempts to close the loophole have been defeated or stalled, four companies – the Tax Dodgers -- have emerged as the only ones to publicly stand in the way of closing the loophole. These four Tax Dodgers are Chrysler, General Motors, International Paper, and Kimberly-Clark. They have launched an aggressive campaign to kill any effort to close the loophole so that they can continue to avoid paying their fair share in taxes while earning profits from California consumers.
As this report shows, these companies are not just reaping profits from sales to California consumers. They also earn millions of dollars in profits from sales of their goods to California government agencies. This analysis, which is the first in a series of reports to be released about the Tax Dodgers, reveals that at the same time these Tax Dodgers are fighting to preserve more than $1 billion in unfair tax breaks, they have sold more than $42 million worth of goods and services to the state in recent years. Taxpayer Funds Received by the Tax Dodgers: Chrysler: International Paper: General Motors: Kimberly-Clark: Total: $23,000,000 $9,000,000 $9,500,000 $907,000 $42,407,000
What this analysis shows is that the Tax Dodgers are eager to sell to California and profit off of California residents, but they do not want to pay their fair share in taxes.
CHRYSLER: TAX DODGER
Chrysler, a company that was kept alive by U.S. taxpayers during the recession, has sold over $23 million in goods and services to California agencies or departments under state contracts or purchase orders since 2006. Meanwhile, it has aggressively fought attempts to close the tax loophole that allows the company to dodge millions of dollars in taxes in California. Chrysler’s California Contracts Total Over $23 Million Since 2006
Via its California dealerships, Chrysler has sold a total of $23,304,019.33 of goods and services to California agencies or departments under state contracts or purchase orders since 2006. The Department of the California Highway Patrol and Department of Transportation have been the two largest purchasers of Chrysler products. Chrysler’s sales, broken down by state agency or department, are shown below.
Department Total Purchased California Highway Patrol $5,325,447.33 Department of Transportation $4,312,917.08 Department of General Services $3,805,055 Department of Parks and Recreation $2,709,595 Department of Motor Vehicles $1,277,297.79 Department of Water Resources $1,011,122 Department of Justice $1,003,109.50 Department of Forestry and Fire Protection $894,769 Department of Corrections $688,175 Department of Food and Agriculture $330,620.18 Air Resources Board $311,086.00 Department of Insurance $269,668.08 Department of Health Care Services $206,605 Department of Fish and Game $205,358.49 Department of Public Health $195,065 Office of the Inspector General $188,284 Employment Development Department $107,173 Department of Education $102,646 Conservation Corps, California $85,081.92 Military Department $47,671.19 Department of Mental Health $42,565 State Lands Commission $41,733.00 Department of Developmental Services $31,281 California Science Center $26,797 California Integrated Waste Management Board $25,144 Board of Equalization $22,859.97 Department of Consumer Affairs $19,451 Department of Conservation $17,442 TOTAL $23,304,019.33 Source: California State Contract and Procurement Registration System
Chrysler’s 10 largest sales since 2006 to California agencies or departments are shown here. Department of General Services 2/8/08 Lasher Dodge Replacement Vehicle Purchase (Dodge Avenger) statewide. $2,693,209 Department of the California Highway Patrol 3/30/07 Lasher Dodge Pursuit Vehicles $1,907,217 Department of the California Highway Patrol 4/3/08 LASHER DODGE AUTOMOBILES $1,032,437 Department of Forestry and Fire Protection 2/5/09 Elk Grove Auto Group 30 EA Dodge 2500 4X4 quad cab pickups $726,024 Department of the California Highway Patrol 3/10/08 LASHER DODGE AUTOMOBILE $719,582 Department of Transportation 12/17/07 Lasher Dodge Pickup, Reg Cab, 2WD, 8500 GVW, 8'Bed, Dodge Ram, Line Item 10 $694,567 Department of the California Highway Patrol 3/28/07 hoblit Haynes dodge Chrysler vehicles, sedans $559,873 Department of Motor Vehicles 2/4/08 LASHER DODGE 2008 DODGE CHARGER $462,611 Department of Transportation 11/29/07 Lasher Dodge 2320-233-0113-3 Utility Vehicle, 4 door, 4wd, midsize, Dodge Durango
$386,577 Department of Transportation 3/17/07 Lasher Dodge (19 each) Pickup, Reg. cab, 2wd, 8600 GVW, 8' bed, Dodge Ram, w5yr 100k warranty, zero deductible, limited slip, trailer tow package, tire fee. $379,944 Source: California State Contract and Procurement Registration System
GENERAL MOTORS: TAX DODGER
General Motors, like Chrysler, was able to survive the recession thanks to the U.S. taxpayers. In addition, it too has sold millions of dollars in cars and maintenance contracts to California state agencies. In fact, as GM has aggressively fought attempts to close the tax loophole in California, it has had at least $9.5 million in state business for cars, good and maintenance services. TOP CONTRACTING AGENCIES The top contracting agencies are listed in the chart below, with General Services, Insurance and Employment development having contracted the most with General Motors. Department Total Purchased General Services $5,197,518.63 Insurance $1,015,580.35 Employment Development $800,686 Fish and Game $561,013.81 Department of Motors Vehicles $419,202.08 Parks and Recreation $248,160.65 Food and Agriculture $165,962 Justice $114.823.94 Corrections & Rehabilitation $80,583.51 Treasurer $48,701.84 Transportation $27,349.39 Water Resources $15,335.09 Forestry and Fire Protection $5,223.71 Pesticide Regulation $2,891.49 Total $8,703,032.49 Source: California State Contract and Procurement Registration System TOP 10 GENERAL MOTORS DEALERSHIP SALES The recent March 2012 General Services contract is by far the largest General Motors sale in recent history, topping $5 million.. General Services 3161695 (contract number) 3/14/2012 $5,197,518.63 Coalinga Motors Inc. Chevrolet Malibu 4door mid size sedan E85 2011 (75) Employment Development C974345 3/26/2009 $732,924.25 Coalinga Motors Inc. Chevrolet Impala (43) DMV
P-90654 3/19/2009 $419,202.08 Coalinga Motors CHEVROLET IMPALA 4-DOOR LARGE SEDAN, E85 (22) Consumer Affairs 8205C1148-8 3/25/2009 $239,390.97 Coalinga Motors, Inc. 2009 Chevrolet Malibu 4 door sedan, E85 Fish and Game CD780223 5/9/2009 $208,460.53 Coalinga Motors (7) 2009 half ton Chevy Silverado Insurance IN110194 9/22/2011 $201,371.28 Coalinga Motors CHEVY IMPALA (10) Highway Patrol 074H8075 4/29/2009 $186,167.51 Coalinga Motors 2009 CHEVY SILVERADO 1500, 2WD, E-85 FUEL PICK-UP TRUCKS Insurance IN80757 3/20/2009 $135,720.66 Coalinga Motors 2009 Chevrolet Impala 4 Dr. Sedan LS. Insurance IN80758 3/20/2009 $133,191.12 Coalinga Motors 2009 Chevrolet Malibu 4 Dr Sedan LS. Insurance IN80773
3/20/2009 $128,560.03 Coalinga Motors 2009 Chevrolet Impala 4 Dr Sedan E85 Source: California State Contracts and Procurement Registration System
INTERNATIONAL PAPER: TAX DODGER
Since 2006, International Paper, through its subsidiaries and distributors, has sold a total of $9,008,228.72 of goods and services to California agencies or departments under state contracts or purchase orders. The Department of General Services is far and away the largest purchaser of International Paper products. International Paper’s sales, broken down by state agency or department, are shown below. NOTE: Most of these payments are via Xpedx, a distribution company wholly-owned by International Paper. Department of General Services $7,792,774.18 Employment Development Department $360,000 Department of Corrections & Rehabilitation $243,621 Department of Motor Vehicles $152,032 Department of Industrial Relations $82,896 Department of Water Resources $48,422 Department of the California Highway Patrol $48,044.04 Department of Consumer Affairs $41,863.64 Department of Transportation $37,690 State Board of Equalization $30,504.16 Department of Mental Health $22,217.17 Correctional Health Care Services (Prison Health Care Services) $20,127.02 Air Resources Board $19,587.74 Office of Statewide Health Planning and Development $16,916.24 Department of Parks & Recreation $16,586.35 Franchise Tax Board $14,962.53 Public Utilities Commission $13,502 Managed Risk Medical Insurance Board $10,139.85 Victim Compensation and Government Claims Board, California $7,177.50 California Victim Compensation & Government Claims Board (formerly Board $5,898 of Control) Department of Managed Health Care $5,218.70 Department of Developmental Services $3,801.03 Department of Child Support Services $3,122.43 Coastal Conservancy, State $1,808.30 Children and Families Commission $1,277.01 Department of Aging $1,087.23 California Technology Agency (formerly Chief Information Officer, Office of the) $1,061.34 Department of Public Health $1,041.39 Department of Alcoholic Beverage Control $1,018 First 5 California Children and Families Commission $975.76 Citizens Redistricting Commission (a temporary agency) $924.22 Department of Pesticide Regulation $863 California Commission on Aging $834.65 Postsecondary Education Commission, California $233.76 TOTAL $9,008,228.72 Source: California State Contract and Procurement Registration System
TOP 10 SALES TO CALIFORNIA AGENCIES International Paper’s 10 largest sales since 2006 to California agencies or departments are shown here: Department of General Services 1/5/09 XPEDX 100# MANILA TAG 17.5 WIDTH 40" OD $670,744 Department of General Services 6/13/07 Xpedx 60# rec. o/s 35" 50" od $516,120 Employment Development Department 12/20/08 International Paper Company ETP Training Agreement $360,000 Department of General Services 4/10/06 Xpedx 60# rec o/s for education CAHSEE books $330,292 Department of General Services 6/14/06 Xpedx Offset 610085,95, 61075 & 82 $216,965 Department of General Services 6/20/06 Xpedx Recycled offset on contract $216,965 Department of General Services 9/28/06 Xpedx Bond $184,097 Department of General Services 9/20/07 XPEDX Computer to Plate Upgrade $162,074 Department of General Services 11/2/06 Xpedx Recycled O/S for inventory and FTB project $161,227 Department of General Services 3/27/07
Xpedx 610085 610095 610175 Recycled Offset $160,552 Source: California State Contract and Procurement Registration System
KIMBERLY-CLARK: TAX DODGER
Kimberly-Clark, the manufacturer of Kleenex facial tissues, Scott paper towels and toilet paper, and diapers, among other products, has sold close to a million dollars worth of goods to California state agencies since 2006 ($907,432.29). The Department of Employment Development has by far signed the most contracts, as the following data shows: Employment Development $752,213 General Services $100,812.40 Developmental Services $42,659.86 Department of Justice $4,784 Department of Corrections and Rehabilitation $2,179.03 Department of Pesticide Regulation $4,784 Source: California State Contract and Procurement Registration System TOP 10 SALES The Department of Employment Development holds the top two largest contracts – each well over $350,000 – with Kimberly-Clark Worldwide. Both were for ETP Training Agreements. Employment Development Et06-55472 5/9/2006 - 5/8/2008 $386,308 Kimberly Clark Worldwide ETP Training Agreement Employment Development 74A0469 2/2/2009 - 2/1/2011 $357,120 Worldwide ETP Training Agreement General Services 3148851 5/25/2010 6/25/2010 $29,925.01 CA Janitorial Supply Corp Kimberly Clark Hardwound Roll Paper Towels General Services 3158092 8/18/2011 - 8/31/2011 $25,714.50 Ktek Products and Systems Inc Kimberly Clark Roll Towels
General Services 3158029 8/15/2011 - 8/30/2011 $23,103.99 Ktek Products and Systems Inc. Kimberly Clark Roll Towels Dept Contract Start End Total Supplier Item General Services 3141702 11/12/2009 - 12/12/2009 $12,975 Green Restroom Supplies Kimberly Clark Hardwound Roll Paper Towels Developmental Services PR150288 11/8/2011 - 11/8/2011 $10,170.86 Westprime Systems, Inc Kimberly Clark Drains General Services 3105018 11/29/2006 - 12/29/2006 $9,094 Fishman Supply Co. Bath Tissue, Coreless & Kimberly Clark Adapters Employment Development C079906 6/17/2010 - 6/17/2010 $8,721 River City Office Supply Kimberly Clark Wipe GeneralServices 3148851 5/25/2010 - 6/25/2010 $29,925.01 CA Janitorial Supply Corp Kimberly Clark Hardwound Roll Paper Towels Source: California State Contracts and Procurement Registration System
Paid for by Yes on 39 - Californians to Close the Out-of-State Corporate Tax Loophole. Major funding by Thomas F. Steyer and Californians for Clean Energy and Jobs, sponsored by environmental organizations and business for clean energy and jobs - Yes on 39.
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