BOSTON – 57 legislators have cosponsored a bill, filed by Rep. Josh Cutler (Duxbury) in the House and Sen. Mark Montigny (New Bedford) in the Senate, that would close a loophole which allows corporations to hide profits earned in Massachusetts in foreign tax havens. Cosponsors include 3 Republicans, giving the move bipartisan support.
“Staring down a $765 million budget shortfall, our leaders on Beacon Hill have a lot of tough choices to make. But amid these tough choices is an easy one: Let’s close a loophole that allows companies to hide money overseas and avoid paying taxes,” said Nathan Proctor, State Director of Massachusetts Fair Share. “Closing this loophole would reclaim $79 million each year in lost revenue. And while that might not erase the current budget shortfall, it’s certainly a good place to start.”
This simple reform, already in place in Oregon and Montana, requires that companies treat profits made in Massachusetts and funneled to known tax havens like the Cayman Islands as domestic taxable income. Over the last year, Massachusetts Fair Share has delivered more than 5,000 comments in support of this measure.
“As a small business owner, I know that 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,” said Rep. Cutler. “We think it’s time to level the playing field and help our Bay State businesses.”
“It is outrageous that hard working Massachusetts residents are expected to pay their fair share of taxes while some major corporations are able to skirt their obligations through the use of murky off shore tax loopholes that a phalanx of lobbyists, year in and year out, protect for special interests. Enough is enough, it is time we end these loopholes and make everyone pay their fair share. The closing of these exploitative loopholes could be used to address issues far more important than the enrichment of corporations and their lobbyists,” said Senator Mark Montigny.
A report by the MASSPIRG Education Fund found that Massachusetts taxpayers could save $79 million a year from a simple reform to crack down on offshore tax dodging. The reform, which has already been proven effective in Montana and Oregon, would require companies to treat profits booked to notorious tax havens as domestic taxable income. “By modernizing our state’s tax code with this simple reform, we can keep millions of dollars in Massachusetts every year, while eliminating incentives for moving business offshore, leveling the playing field for Baystate businesses that compete with multinational corporations, and protecting regular taxpayers from picking up the tab for tax dodgers,” said Deirdre Cummings, MASSPIRG’s Legislative Director.
“Massachusetts has real challenges – from fixing up the MBTA to expanding early education and preschool,” said Proctor. “We simply can’t afford these corporate tax dodging schemes.”