As the tax filing deadline approaches, many Maine people are looking for that last piece of paperwork or worried about how they are going to pay their tax bill.
Some huge multinational companies do business in Maine every day, all year, but come tax time, use an accounting loophole to hide income in offshore tax havens to avoid paying corporate income taxes. Those companies make profits from the pockets of your neighbors and friends and then don’t report that income.
Some of us in the Maine Legislature have had enough, and we are working to end this shady practice.
Recently, both the House and the Senate voted to approve legislation that would identify well-known tax havens to ensure proper income reporting to the state. That bill awaits a funding determination and approval from the governor.
It is my hope that we do all that we can to eliminate this accounting gimmick.
Maine Revenue Services estimates that each year, nearly $5 million in income tax revenue is hidden away offshore and must be made up for. This means that Maine’s small businesses pick up the tax tab. That is not fair.
Oregon recently enacted similar legislation, and Montana was the first state to close the loophole and has seen $40 million in new revenue since the law was changed in 2003.
The nightly news has shown stories about well-known U.S. companies like General Electric, Apple and Google using offshore havens to lower its tax bills. In the federal government, there are powerful lobbyists who have successfully held back any comprehensive reform. But states shouldn’t wait for them to do their job when we can simply do ours.
My colleague, Rep. Adam Goode, D-Bangor, has worked tirelessly to close this tax loophole and make sure that these huge companies play by the same rules that our Maine businesses and people do.
The legislation identifies 30 known tax havens and requires companies to report income from those places. If we don’t let corporations hide money in Delaware or Nevada and other low-tax states, why would we let corporations hide money in Liechtenstein?
Maine legislators have heard from a few officials from the tax haven locations listed in the legislation. They say that they feel as though we are blacklisting countries for allowing something that is technically legal.
I say that if you are helping huge multinational companies with sophisticated accounting schemes to hide income made in Maine and profiting from that arrangement, then, yes, we will call you out.
It’s not fair to struggling Maine families and small businesses when we turn a blind eye to multinational companies not paying its share.
Maine shouldn’t wait to enact this tax fairness legislation. I hope that the governor signs this legislation to make sure that all businesses are playing by the same rules as our Maine businesses.
Rep. Archie Verow is serving his first term in the Maine Legislature and represents part of Brewer.