Big Profits, Tiny Taxes || Part 2
Originally published Nov. 14, 2019
For years, the company that makes Dr. Pepper soda and Snapple iced tea paid Florida income taxes like the single big business it was.
But then it realized it could pay less tax if it were two companies.
So in 2013, the soft-drink giant formerly known as Dr. Pepper Snapple Group split itself apart, according to litigation records obtained by the Orlando Sentinel. The move cut its annual state income tax bill by an estimated $400,000 or more.
Dr. Pepper’s split -- made for tax purposes only -- illustrates one way companies take advantage of what experts say is the single biggest corporate tax break in Florida: The option for big companies to file separate tax returns for different parts of their business, rather than a single return covering the entire enterprise.
Florida is in a shrinking minority of states that still allows companies to do this, which gives companies much more freedom to move money around and avoid taxes.
“That is one of the most significant, self-inflicted wounds that a state can impose on itself in terms of subjecting its state corporate income tax to tax-avoidance vulnerabilities,” said Kirk Stark, a professor of tax law and policy at UCLA Law in Los Angeles.
State economists have estimated that requiring big companies to file one comprehensive tax return could raise nearly a half-billion dollars annually in revenue. That’s enough money to double the size of Florida’s affordable housing fund -- with enough left over to pave more than 500 miles of new bicycle and pedestrian trails.
Read the rest of the story here.
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