WASHINGTON, D.C. — Hundreds of protesters, chanting “We are the 99 percent” and waving signs decrying corporate tax dodging and other issues, marched in front of the Marriott Wardman hotel in Woodley Park, the site of the annual Conservative Political Action Conference, this afternoon.

Occupy CPAC, as protesters dubbed it, featured a giant inflatable “corporate fat cat,” and four protesters were dressed in blue and white baseball uniforms (resembling those of the Los Angeles Dodgers) that read “Tax Dodgers,” a reference to presidential candidate Mitt Romney. For more than a half hour, the protesters chanted and marched outside the hotel.

View pictures of the protest:

Many of the conference’s attendees ventured out of the hotel to watch the protests, and as protesters chanted “We are the 99 percent!” one attendee screamed back, “No, you are the bottom one percent!” Others stood around laughing, while one looked to another attendee and said, “G–damn Occupiers. F–k those guys. This is America.”

As a group of protesters attempted to move up the hotel’s driveway toward the entrance, police blocked them and threatened them with arrest for violating public property rights. At that point, members of the media covering CPAC who had gone outside to cover the protest were also forced back into the hotel with threats of arrest. According to one organizer affiliated with the march, roughly 500 protesters participated in the march.

Back in 2008, Google seemed to have set the standard for tech corporation tax dodging, using complex accounting and subsidiaries in Ireland and Bermuda to drives its tax rate all the way down to 2.4 percent. But if all goes according to plan, Facebook will be able to use its initial public offering — via the stock options it gives its employees — to not only avoid paying corporate income tax for years, but to receive a $500 million refund from the federal government, as Citizens for Tax Justice explained:

Tax law says that if a corporation issues options for employees to buy the company’s stock in the future for its price when the option issued, then if the stock has gone up in value when employees exercise the options, the company gets to deduct the difference between what the employee bought it for and its market price.

When, as Facebook expects, the 187 million stock options are cashed in this year, Facebook will get $7.5 billion in tax deductions (which will reduce the company’s federal and state taxes by $3 billion). According to Facebook, these tax deductions should exceed the company’s U.S. taxable 2012 income and result in a net operating loss (NOL) that can then be carried back to the preceding two years to offset its past taxes, resulting in a refund of up to $500 million.

Facebook’s filing papers with the Securities and Exchange Commission confirm as much:

Option exercise activity would generate a corporate income tax deduction [that] exceeds our other U.S. taxable income [and] will result in a net operating loss (NOL) that can be carried back to the preceding two years to offset our taxable income for U.S. federal income tax purposes, as well as in some states, which would allow us to receive a refund of some of the corporate income taxes we paid in those years. Based on the assumptions above, we anticipate that this refund could be up to $500 million.

“Due to the stock option loophole, Facebook may not pay any corporate income taxes on its profits for a generation,” said Sen. Carl Levin (D-MI). “It isn’t right, and we can’t afford it.” The Treasury Department estimates that it loses about $2 billion per year due to companies using this stock option loophole to avoid taxes.

The Congressional Budget Office noted last week that U.S. corporate tax revenue has hit a 40 year low, driven down by corporate tax cuts and the widespread use of loopholes and tax havens. While corporate profits have rebounded to their pre-recession heights, corporate revenue has yet to even remotely follow suit.

One of the big factors helping corporations avoid taxes is their ability to report profits earned all over the world in low- or no-tax jurisdictions like Bermuda or the Cayman Islands. As Center for American Progress Director of Fiscal Reform Seth Hanlon noted, corporate profit shifting costs the U.S. more in revenue every year than the country spends on the entire Department of Education or Department of Homeland Security:

Profit shifting erodes the corporate revenue base, draining the United States of tens of billions of dollars in revenue every year. And it is getting worse. The U.S. government was estimated to have lost about $90 billion in revenue in 2008 from profit shifting, up from $60 billion in 2004. To put that figure in perspective, the corporate income tax only raised an average of $300 billion per year during the 2004-08 timespan, suggesting that profit shifting is draining the U.S. Treasury of a significant share of corporate tax revenues.

The U.S. currently has the second lowest effective corporate tax rate in the developed world. In the last three years, at least 30 major corporations paid no federal corporate income tax at all, despite making $160 billion in profits. In his State of the Union address, President Obama called for a minimum tax on corporations, saying, “no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here.”

New Jersey Gov. Chris Christie (R-NJ) announced a new plan to cut income taxes by 10 percent over three years during his State of the State address in January. Republicans are once again claiming that this will bring more jobs to the state, thus improving the local economy and ultimately bringing in more revenue to offset the lower rates. (The claim that lower tax rates increases revenue is not borne out by the facts.)

Christie has claimed that his plan is aimed at providing “across the board” tax relief. But as a new analysis of the proposal points out, those who will benefit most from the Governor’s plan would be the Garden State’s wealthiest residents, as its not income taxes, but property taxes that make up the bulk of the tax bill for Jersey’s middle-class:

A family earning $50,000 a year would save $80.50, and those making $100,000 would save $275, according to David Rosen, budget and finance officer with [the Office of Legislative Services]. Families who make $1 million would save $7,265, Rosen said.

The OLS analysis also examined a tax snapshot of 2004, the last time the Treasury Department married property and income tax payments by address. The data show that families in 2004 who made below $200,000 paid a greater share of their income toward property taxes than toward income taxes. For example, a family that makes $80,000 paid about 6 percent of its gross income for property taxes and about 1.6 for income taxes.

The opposite is true for the state’s wealthy, who pay a much higher income tax rate under the state’s progressive tax structure. A family that earned $500,000 in 2004 paid about 1.8 percent of its gross income for property taxes and 5 percent for income taxes.

The Newark Star-Ledger noted in an editorial that Christie’s plan “will primarily benefit New Jersey’s wealthiest class while doing little to ease the property tax burden on the middle class.” Already, according to the Institute on Taxation and Economic Policy (ITEC), New Jerseyans in the bottom 20 percent of earners — those making $12,400 on average — pay 10.7 percent of their overall income in taxes. Meanwhile, those in the top 1 percent — with an average income of $2,258,300 — pay 7.2 percent.

As Times of Trenton columnist George Amick noted, “it’s not the income tax that’s oppressing average New Jerseyans.” According to the ITEP data, property taxes in New Jersey are particularly regressive, while income tax rates are more progressive. Democrats have called for Christie to cut property taxes instead.

Christie’s plan is projected to cost the state $1.3 billion dollars by the time all of the cuts are phased in. In order to make up for that shortfall, some budget changes will have to be made, and if one of those changes is increasing property taxes, Christie’s plan could turn out to be even more regressive than it appears.

– Zachary Bernstein

Our guest blogger is David Min, Associate Director for Financial Markets Policy at the Center for American Progress Action Fund.

Critics of the mortgage settlement negotiated between the state attorneys general and five of the nation’s biggest banks have claimed that the $25 billion settlement is merely a drop in the bucket compared to the size of the overall housing market problems. But is this a fair characterization?

The settlement will help over a million households, and provide $25 billion in relief to struggling homeowners, including an average of more than $20,000 in principal reduction for approximately one million homeowners. This appears to be a relatively small number of homeowners being helped when compared with the 11 million households that are currently “underwater,” owing a total of $699 billion more on their mortgages than their homes are worth.

But this simple comparison ignores the fact that this settlement is limited to mortgages that were originated for private label securitization. According to the Federal Housing Finance Agency, approximately 35 percent of the nine million loans originated for Wall Street securitization are currently underwater, with an average negative equity balance of about $50,000.

In other words, one in three underwater homeowners with a mortgage originated for Wall Street securitization is going to receive loan forgiveness equal to nearly half of their negative equity.

Critics are also ignoring the fact that the settlement is narrowly tailored to claims around robo-signing and other foreclosure process violations, claims which have very uncertain litigation value and would have taken a long time to resolve. Under the terms of this deal, state and federal prosecutors are free to pursue all other mortgage fraud claims, of which there are many. As the banks themselves understand, they are still subject to an enormous amount of potential liability around their past and present wrongdoings.

When we take these items into consideration, yesterday’s settlement seems like a lot bigger deal than most of the critics are willing to acknowledge. Certainly, the state AG settlement is not a solution to the problems of the housing market, but it is clearly a good and important step towards rectifying the problems of the housing market and holding accountable those responsible.

Yesterday, 49 states joined the federal government in announcing a $26 billion settlement with five of the nation’s biggest banks over the banks’ foreclosure fraud abuses. The money from the settlement is meant to aid homeowners who lost their homes to foreclosure or who find themselves underwater, meaning they owe more on their mortgage than their home is currently worth.

However, Wisconsin Gov. Scott Walker (R) — whose high profile assault on workers’ rights has prompted a recall effort against him — isn’t planning to use the money to help homeowners. Under the terms of the settlement, Wisconsin is set to receive $140 million, $31.6 million of which comes directly to the state government. And Walker is planning to use $25.6 million of that money to help balance his state’s budget:

Of a $31.6 million payment coming directly to the state government, most of that money – $25.6 million – will go to help close a budget shortfall revealed in newly released state projections. [Wisconsin Attorney General J.B. Van Hollen], whose office said he has the legal authority over the money, made the decision in consultation with Walker.

“Just like communities and individuals have been affected, the foreclosure crisis has had an effect on the state of Wisconsin, in terms of unemployment. … This will offset that damage done to the state of Wisconsin,” Walker said.

A memo from Wisconsin’s Legislative Fiscal Bureau released yesterday notes “it is anticipated that Wisconsin will receive $31.6 million. Based on discussions between the Attorney General and the administration, of the amounts received by the state, $25.6 million will be deposited to the general fund as GPR-Earned in 2011-12, and the remaining $6 million will be retained by the Department of Justice to be allocated at a later date.”

Milwaukee Mayor Tom Barrett (D) criticized Walker’s move, saying “not one dime [of the settlement] should be used to fund the unbalanced state budget.” Adding insult to injury, Walker has previously criticized using one-time settlement money to fill budget holes.

The settlement money already doesn’t come close to addressing the depths of the nation’s housing problem, though it will provide real relief to the people whom it does reach. But the money was certainly not intended to paper over state budget problems, particularly in a state whose governor assured everybody up and down that busting his state’s public unions was the key to fiscal solvency. (HT: Jessica Arp)