I discussed this budgetary and collection problem of all governments in my "budgcure" website, at My BudgCure Website, Urging Enforcement of the Tax Law Against Major Corporations. The title of the website is "How Cities and States Can Cure Their Budget Deficits - 1,000 Times the Value of the Tobacco Litigation - Many Hundreds of Billions of Dollars Are Being Thrown Away Needlessly by State, City and County Governments". As the solution, I urged that the local and state governments audit the income tax and other tax returns of the 1,000 largest corporations. As things stand now, there have been no real audits of the top 1,000 corporations because of the size of the job. Yet, if this were done, through the hiring and training of a sufficient number of persons, the dollar amount to be realized by all governments, federal, state, city, and local, would be staggering. This is in light of the apparent fact that about 50% of the major corporations in the United States do not pay any income tax at all. This is according to a September, 2004 study by A Joint Project of Citizens for Tax Justice & The Institute on Taxation and Economic Policy. See 2004 Study Showing How Major Corporations Do Not Pay Their Share of Income Taxes. The Study was financed by bequest of Leslie R. Zacharias to try to stop the ever-increasing disparity in the distribution of wealth in the United States. The Study was of the 2001-2003 taxation of 275 of the Fortune 500 companies. The Study reports, for example, that "Eighty-two of the 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003."; and that "Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-2003 period." and that "In 2003 alone, 46 companies paid zero or less in federal income taxes." and that "In calendar 2001, the Treasury paid corporations $40 billion in tax refunds, a third more than the 1998-2000 average." and that " and that "Then in calendar 2002 and 2003, after the law was changed to expand tax subsidies and make it easier for corporations to carry back excess tax breaks to earlier years, corporate tax refunds skyrocketed to an average of $63 billion per year -- more than double the 1998-2000 average."
The important point I want to make is that whatever taxes the top 1,000 corporations paid or did not pay was basically the result of a voluntary reporting system without any significant enforcement mechanism in which the participating accounting firms are paid well to help the corporations avoid or evade income and other taxes they should be paying, knowing that there is no government agency that will come in to look at all the books and records. To the extent there is any type of review or audit, it is done as to perhaps less than 1/10th of 1% of the corporation's transactions, with any resulting increase in tax being minimal in comparison to the tax avoided or evaded by the corporation.
The NYS Attorney General can commence a lawsuit on behalf of all local governments; and a community could demand an audit of records relating to any taxes applicable to the community (such as a local sales tax on deliveries into the town or village, or any amount which the municipality may be entitled as a percentage of a county or state taxation of the corporation). Clearly, the federal and state governments have hundreds of billions of dollars of tax moneys that should have been paid, but were not, with more than than in interest and penalties. Local governments have far less at stake, but for many towns, villages and counties there are corporate taxes that probably were not paid in full. Even applications for tax reduction should be looked over for evidence of fraud, and suits brought to recover the amounts out of which the government was defrauded, together with interest, penalties and punitive damages.
You should read the entire report. 2004 Study Showing How Major Corporations Do Not Pay Their Share of Income Taxes.