Maine House passes bill to ban corporate tax havens

Maine House passes bill to ban corporate tax havens

On Wednesday, by a mostly party-line vote, the Maine House of Representatives voted in favor of a bill sponsored by Rep. Ryan Tipping of Orono to close loopholes that allow large corporations to avoid paying taxes in Maine. All Republicans present except Rep. Roger Sherman of Hodgdon voted against the bill, while all Democrats and independents voted in favor except for Rep. Martin Grohman of Biddeford, who opposed it.

“Right now, we are watching corporate taxes go uncollected because our tax code has not kept pace with creative accounting practices used by many large corporations,” said Tipping, who serves as House chair of the Taxation Committee. “This bill is an attempt to level the playing field by making sure small businesses aren’t picking up the tab for multinational corporations.”

Under current law, companies are able to declare their Maine-based profits overseas in countries defined as tax havens. Among the criteria that define a tax haven, as developed by the Organization for Economic Cooperation and Development, are: having a nominal tax rate, ineffective exchange of information and an overall lack of transparency.

“When corporations hide their profits, the tax base shrinks and homegrown businesses and Maine residents have to pay higher rates to support the services that help our communities and businesses thrive,” explained Sarah Austin, a policy analyst for the Maine Center for Economic Policy in testimony before the Taxation Committee in March. “Maine already requires combined reporting to stop multistate corporations and their subsidies from transferring Maine made profits into on shore tax havens like Delaware and Nevada. It only makes sense for Maine to close the loophole that lets multinational corporations engage in the same tax dodging practices on the international stage.”

The Maine Revenue Services estimates that the tax haven loophole costs Maine $4 million in revenue each year.

The bill was opposed by Lauren LePage, Governor Paul LePage’s daughter, who testified on behalf of the Maine State Chamber of Commerce. She specifically defended Liechtenstein and Luxembourg, which would be identified as tax havens under the act, saying that “today’s companies are global and operate in the global marketplace. We need to ensure we have good relations with our trading partners worldwide.”

The measure now heads to the Republican-controlled Senate where it is unlikely to pass.

Photo via Andi Parkinson.

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