By Rep. Josh Cutler and Nathan Proctor
Benjamin Franklin once famously wrote that nothing is inevitable in life, except for death and taxes. Franklin, however, never met General Electric, Boeing, Verizon, Pepco and Duke Energy.
What these companies have in common is that they are among the 26 Fortune 500 companies that paid no federal income taxes during a five-year period from 2008 through 2012, despite pocketing a combined profit of $170 billion. As the rest of us file our taxes by this month, that’s tough to swallow.
For some multinational corporations a favorite scheme to dodge taxes is to move profits made here to offshore tax havens in places like the Cayman Islands that levy little to no tax. Stashing cash overseas and leaving the rest of us to pick up the tab is an affront to all hard-working American taxpayers, but especially our small business community, the real economic engine for our economy.
Small businesses already face plenty of challenges, we should not ask them to compete in a rigged marketplace that favors a few corporate giants that can afford to exploit our tax code in this manner. Local businesses aren’t setting up foreign subsidiaries to skirt tax codes, they’re paying their fair share for the services we all benefit from.
We think it’s time to level the playing field and help our Bay State businesses. Let’s close these loopholes so that everyone plays by the same rules. The good news is, we don’t need to wait for Congress, we can take action right now in Massachusetts.
A bi-partisan amendment to close the “waters’ edge” loophole was filed this week to our state budget. If adopted, this measure would ensure that multinational companies doing business in Massachusetts would no longer be able to dodge state taxes by sending profits to a sham shell company located in a country where they don’t have to pay tax. According to a recent report by MASSPIRG, this would recoup $79 million for the state budget currently being lost to tax haven abuse.
This simple reform is gaining steam around the country and it’s time Massachusetts took it up. Already, Oregon and Montana have closed the loophole. Maine, Minnesota and Rhode Island have legislation moving as well. That’s $79 million that could help pay for much needed repairs to our roads and bridges, boost local aid or invest in early education.
Massachusetts has world-class institutions, a highly educated workforce and top notch benefits for our veterans and seniors. These are services we all pay for through our tax dollars. When a few large corporations that profit under the umbrella of these services but shirk their responsibility to pay for them, that shifts more of this burden on us, resulting either in higher taxes or reduced services.
Small businesses already face plenty of challenges, we should not ask them to compete in a rigged marketplace that favors a few corporate giants that can afford to exploit our tax code in this manner.
No job was ever created by shifting profits to these offshore tax havens. It’s time to promote innovation and creativity in the marketplace, not in our tax code.
Rep. Josh S. Cutler is State Representative for the Sixth Plymouth District and a member of the Joint Committee on Community Development and Small Business.
Nathan Proctor is state director of Massachusetts Fair Share, a statewide non-profit advocacy group that believes everyone should get a fair shot, do and pay a fair share, and play by the same rules.