Currently showing posts tagged tax loop holes

  • Tax haven bill prevents tax evasion, levels playing field for Maine businesses

    By Ramona du Houx

     States lose an estimated $20 billion annually because of corporate use of offshore tax havens. While President Obama is attempting to close some of these tax abuses it's generally up to the states to close loopholes.

     Maine currently is powerless to prevent corporations from avoiding taxes by shifting massive profits to offshore to these tax havens, but a bill before the Legislature could stop this abuse, said Joel Johnson, an economist with the Maine Center for Economic Policy, who testified before the Taxation Committee on Monday.

    “Major corporations doing business in Maine can enjoy the use of Maine’s roads and bridges, our public safety, and our educated workforce, while at the same time paying far less than their fair share of the cost of these public goods and amenities,” said Johnson.

    LD 341, An Act To Prevent Tax Haven Abuse, would prevent multinational corporations from dodging taxes in Maine by using accounting tricks that make it seem as though the income was generated elsewhere. Under the measure sponsored by Rep. Ryan Tipping-Spitz, corporations would have to report income from a list of known offshore tax havens, including Liechtenstein, Bahrain, Luxembourg and Monaco.

    According to Tipping-Spitz, Maine is losing $10 million each two-year budget period because of this use of offshore tax havens.

     “The bottom line: when we forgo the collection of these taxes, we are leaving local small businesses and Maine people holding the tab,” said Tipping-Spitz, who served on the Taxation Committee in the previous Legislature. “Is this too complicated to tackle? No. Tax authorities from these other states are willing to work with us to share best practices and help Maine implement a strong, fair law. When our committee was working this bill last year, I found it useful to remind myself of the good $10 million can do for working people and small business owners here in Maine.”

    Tipping-Spitz stated that five states and the District of Columbia already have adopted practices like those in LD 341. Maine already has domestic tax evasion checks in place to prevent corporations from hiding money in states like Delaware and Nevada.

    During the public hearing, Tipping-Spitz recommended that the committee remove the Republic of Ireland from the list of tax havens currently in the bill and include language that requires Maine Revenue Services to report out suggested updates to the list biannually, as Montana does.