Fierce opposition by the nation's governors, unions and advocates for fair taxation has prompted the U.S. House of Representatives Committee on the Judiciary to cancel a scheduled mark-up of legislation overhauling the Business Activity Tax (BAT). Opponents to the bill, including the AFT, charge that the so-called Business Activity Simplification Act, H.R. 1956, is a bow to corporate interests at the expense of public services.

"If enacted, this legislation would result in less state corporation income tax and require either a cut in essential state and local services or an increase in the taxation of individuals and families," said AFT Legislation Department director Kristor Cowan in a March 28 letter to committee members. The National Governors Association estimates that H.R. 1956 would cumulatively cut state corporate income tax revenues by $5 billion to $8 billion in fiscal year 2007 alone (see state-by-state chart).

The measure was introduced by Virginia Republican Rep. Robert Goodlatte, an ally of anti-government activist Grover Norquist, who is president of Americans for Tax Reform. It is part of federal and state strategy by corporations to increase the portion of their nationwide profit that is not taxed by any state, reports the Center on Budget and Policy Priorities (CBPP). Corporations have already succeeded in winning measures in 14 states to lower the corporate taxes of in-state corporations and to shift these taxes onto out-of-state corporations.

Details and background on the bill and similar state proposals are posted at the Center on Budget and Policy Priorities Web site.

March 31, 2006