One of the world’s biggest retailers, Target Corp. turned a more than $3 billion profit last year — and the company made a lot of its money in Florida, one of its three biggest states by sales.
But Target Corp. has a subsidiary called Target Enterprise Inc. And Target Corp. pays lots of fees to Target Enterprise — a marketing fee, a merchandising fee, a strategy fee, a brand-building fee — essentially moving money into the subsidiary.
And Target Enterprise files a standalone income tax return in Florida, according to records obtained by the Orlando Sentinel. On that tax return, Target Enterprise claims that it earns almost all of its income outside the state.
A spokesman for Target declined to discuss the company’s tax strategies. But the giant retailer is by no means unique. Records show that many of the world’s largest corporations take advantage of Florida’s system of “separate reporting” for their subsidiaries, which gives them wide latitude to shift income to out-of-state subsidiaries — and away from state income taxes.
Tax-reform advocates attempted unsuccessfully over the years to persuade Florida lawmakers to switch to a new system — called “combined reporting” — which would force companies to file a single tax return for their entire business and restrict their ability to move money around simply to avoid state taxes.
But some groups are starting a new push for combined reporting now amid a COVID-19 pandemic that has devastated Florida’s tourism-dependent economy and shredded the state budget. State economists are projecting a budget shortfall of more than $2 billion this year, meaning leaders will likely have to raise money somewhere — whether that means increasing things like driver’s license fees or university tuition, forcing shoppers to pay sales tax on their online purchases, or collecting more money from gambling.
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