Defending Workers & Families in 2013

1. Defending Workers & Families in 2013 Susan Mottet Senior Policy Specialist & Legal Analyst Progressive States Network smottet@progressivestates.org | 202.730.7302

2. 3 Policy Priorities to Defend Workers & Families in 2013

3. Combined Reporting: Closing Corporate Tax Loopholes What is combined reporting? Combined reporting requires multi-state corporations to report profits from all entities, including subsidiaries, for tax purposes. This restricts tax avoidance strategies and nullifies certain tax shelters, preventing multi-state corporations from avoiding paying the taxes they owe. Send $30 million in trademark licensing fees to my Passive Investment Co. in DE, which doesn’t tax intangible property, such as trademarks. $0 in corporate income taxes to CT

4. Why Combined Reporting? • Fairness: A February 2012 survey of small business owners conducted by American Sustainable Business Council, Main Street Alliance, and Small Business Majority found that ¾ of small businesses say “their small business is harmed when loopholes allow big corporations to avoid taxes.” • The revenue is needed: With many state budgets facing shortfalls from the recession, it’s time to make sure that multi-state corporations are paying their fair share of state taxes. A Citizens for Tax Justice and the Institute on Taxation and Economic Policy analysis found that 252 Fortune 500 companies avoided paying over $41 billion in state taxes by using other loopholes. States that adopt combined reporting would see an increase in corporate tax revenue of 10-25%.

5. Combined Reporting Adoption

6. StateDevelopment Banks States and cities spend about $70 billion a year in the name of economic development. Much of it is meant to attract large employers from other states. Rather than create new jobs, it creates a race to the bottom in tax fairness and corporate accountability. 98% of new jobs are created by small business startups and existing business expansion. Wall Street banks have cut back on small business lending by more than double the cutback in overall lending.

7. StateDevelopment Banks How states bank without a State Development Bank • Most states contract with numerous banks, mostly large Wall Street banks, for a variety of financial services. • The state pays fees for a range of bank services and receives interest on deposits. • Most of the state money on deposit with these banks is invested in out of state ventures, doing very little to grow the economy in your state. What a State Development Bank Would Do • A state bank would provide the opportunity to leverage the state’s financial resources, increase lending to businesses in your state and reduce your state’s banking expenses while directly contributing to your state’s general revenue.

8. StateDevelopment Banks Invest your state’s tax dollars in your state! A state development bank invests your state’s cash reserves – potentially billions of dollars – in businesses in your state, stimulating the local economy. Substantially increase lending without increasing state investment. Unlike an economic development loan from a state agency, a state bank can make $100 million in loans from $10 million in capital, increasing loan volume ten-fold.

9. StateDevelopment Banks • Fund economic development without tying up state resources. • Save taxpayers dollars. • Generate revenue without increasing taxes.

10. StateDevelopment Banks

11. Wage Theft

12. Wage Theft

13. Wage Theft Wage theft is the illegal underpayment of wages. It was already a major problem before the recession. • 2008-09 survey of low-wage workers in Chicago, LA & NYC • 64% suffer wage theft each week • 26% paid less than minimum wage • 76% rate of overtime violations • Wage Theft creates a de facto sub-minimum wage • Costs workers 15% of earnings, on average • $7.25/hour = $6.16/hour after wage theft

14. Wage Theft Common to Low-Wage Sectors Retail ∙ Food Service & Hospitality ∙ Construction Warehousing ∙ Domestic Work & Child Care ∙ Day Labor Types of Violations Minimum Wage & Overtime ∙ Illegal Paycheck Deductions “Off-the-Clock” Work & Meal Break Violations ∙ Tip Stealing Inadequate Enforcement + Poor Laws = Crime Wave Ratio of US DOL Investigators to Private Sector Workers

15. Wage Theft • New PSN report on state wage theft laws • 44 states & DC receive failing grades

16. Progressive States Network Policy Resources • Healthcare • Tax & Budget • Immigration • Family & Work Issues • Elections http://www.progressivestates.org/blueprint