It would be interesting to know what goes through the heads of corporate executives who scheme to avoid paying their fair share of taxes.
Are the competitive pressures at the top of the business world so intense that they simply donâ€™t think beyond the moment? Perhaps they never imagine what a world would look like if everyone dodged their taxes?
How, for example, would their goods get to market if roads crumble? How would their businesses function if schools failed to produce a ready, qualified workforce?
Itâ€™s nice to think that they just donâ€™t think.
Maybe they do, and donâ€™t care. Itâ€™s your problem, not theirs.
These questions popped to mind recently while reading through court documents filed in the tax dispute between the state of North Carolina and the parent company of Food Lion.
The state says Food Lion tried to avoid paying nearly $4.4 million in corporate income tax in 2000 by shifting income earned in this state to Florida. The state Department of Revenue wants Food Lion to also pay $1.3 million in interest and $1.2 million in penalties.
Food Lion says it shouldnâ€™t have to pay any of the money because the stateâ€™s rules determining when it is being cheated are unfair or even non-existent. It also says the moving of $274 million in earnings to Florida involved a legitimate business purpose.
A lower court judge ruled last winter that the company must pay the back taxes and interest, but not the fine. Both sides have appealed.
Most of the facts in the case arenâ€™t in dispute.
According to court documents, Food Lion did move the North Carolina income; it did so after paying an accounting firm $1.8 million; that accounting firm promised that the grocer could save between $10 million and $12 million a year on its state taxes, reducing its effective tax rate to 0.11 percent.
(In fact, the company paid $2.8 million in corporate income taxes in 2000. If the stateâ€™s additional assessment of $4.4 million is correct, the company attempted to pay an effective rate of about 3 percent. The corporate tax rate in North Carolina is 6.9 percent.)
If history is any guide, Food Lion will lose its appeal.
In recent years, the state won similar tax cases against Wal-Mart and mall retailer The Limited.
What has changed is that state legislators, in each of the last two legislative sessions, have substantially weakened the laws that allow state revenue officials to go after corporate tax dodges.
When the courts say the law isnâ€™t on your side, apparently you change the law.
Those changes wonâ€™t alter this basic fact: Someone has to pay for the roads and the schools and the prisons.
If the stateâ€™s top business brass believes that they can avoid that responsibility, should they be surprised if everyone else comes to a similar conclusion?
They might want to factor that sentiment into these accounting schemes and calculate the effect on the bottom line.
Scott Mooneyham writes about North Carolina politics for the Capitol Press Association.