MONTGOMERY Gov. Don Siegelman last week sounded like former Gov. George Wallace when he said his $160 million tax plan would make big companies pay their fair share of taxes, political observers said.
“It frequently makes for good campaign rhetoric to beat up on people who are perceived to be unusually well-off or privileged,” said Brad Moody, a political scientist at Auburn University Montgomery. “He sounds a little bit like Wallace on this.”
Wallace in the 1960s and 1970s often blamed big companies, the “Big Mules,” for many of Alabama’s problems.
Siegelman on Thursday unveiled his proposal to raise $160 million a year by closing corporate income-tax loopholes and raising the business privilege tax on the net worth of large companies.
He said he’s pushing his proposal, despite the no-new-taxes pledge he took in 1998, because not doing so would bring a second year of proration across-the-board cuts in state school spending caused by low tax collections in a weak economy.
“If I have to choose between a no-new-tax pledge and the children, I’m going to be with the kids,” Siegelman said.
Friday, he hammered on the tax fairness issue.
“What we’ve got to have is these loopholes closed and we’ve got to ensure that these large corporations pay their share of taxes just like working Alabamians do,” Siegelman said.
He said 619 companies doing business in Alabama last year made a total of $850 million in profits here but paid nothing in state corporate income taxes, which flow to the Education Trust Fund for public colleges and schools.
“These multistate companies that come in here and make all these huge profits aren’t paying a dime,” he said.
Court cases and changes in income-tax law pushed by business groups in recent years have slashed the income taxes paid by large out-of-state companies, Siegelman said.
He said big companies based out of state take Alabamians’ money at their stores here and then use smart tax lawyers to beat Alabama’s tax system.
“Let’s close these loopholes make these folks who are coming in here, taking our money, make them pay their fair share,” Siegelman said.
One out-of-state company recently made more than $100 million in Alabama but paid no state income taxes, he said. “It’s not right. It’s not fair,” he said. State law prohibits officials from naming companies and the tax they pay.
Bill O’Connor, president of the Business Council of Alabama, said business leaders are willing to meet with Siegelman “to try to find shared solutions to these problems.”
“But I can’t find any worse time to raise taxes than in a recession,” he said. “Business men and women in this state are struggling every day to try to make ends meet.”
O’Connor noted that Siegelman blasted big out-of-state companies Friday while saying waitresses, teachers and small business owners paid their fair share of taxes.
“Nobody wins when you try to divide and conquer,” he said. “To try to point fingers and place blame is to turn back the clock.”
Siegelman said his proposal to raise money for schools through raising business taxes by $160 million a year offered lawmakers, business executives and voters a stark choice.
“Is it a test case? Absolutely,” Siegelman said. “Because the hottest places in hell are reserved for those who in times of great moral crisis maintain their neutrality.
“You’re either for education and against cuts or you’re for cuts and against education. It is that simple,” he said.
State Sen. Bill Armistead, R-Columbiana, said he expected Siegelman to borrow another Wallace tactic: propose his tax plan and then run for re-election next year against a do-nothing Legislature if lawmakers reject his plan.
“It’s the old George Wallace trick, in my opinion,” Armistead said.
Moody said Siegelman may figure he wins either way with his tax proposal.
If lawmakers kill it, he attacks them. If they pass it, Moody said, Siegelman can claim credit and maybe avoid a second straight year of proration. He cut state education spending last year by $266 million, or 6.2 percent.
“He doesn’t think he can be re-elected having proration of 5 to 6 percent for two years in a row in the education budget,” Moody said.