Maine does not need to wait for federal action to stop corporate tax avoidance
AUGUSTA, Maine — Huge, multinational corporations such as Apple, Pfizer, Exxon Mobil and Google are using a complex system of international accounting loopholes to stash US-based profits in offshore tax havens. This global tax avoidance scheme costs Maine up to $52 million annually, according to a new issue brief released today by the Maine Center for Economic Policy.
“Mainers invest a lot to create the strong economy where corporations can succeed,” said Sarah Austin, the report’s author. “Corporations’ employees are educated at our public schools. They use our public roads and bridges and rely on our firefighters and police officers to protect their property. But instead of paying their fair share to sustain and improve economic conditions for future generations, corporations are paying an army of lawyers and accountants to exploit offshore tax havens and get out of paying taxes.”
In 2016, Fortune 500 companies held a total of $2.6 trillion in offshore profits. This tax avoidance tactic can be seen clearly in the disparities between US-based profits booked to offshore tax havens and those nations’ GDP.
For example, US-based multinational companies reported in IRS filings that $104 billion in their combined profits were generated in tax haven Bermuda in 2012, despite the GDP of the country being only $6 billion that year. This disparity shows clearly that these profits were not generated from substantial business activity in Bermuda, and instead were the result of offshore tax haven abuse.
Action is needed at the federal level to fully rein in the use of offshore tax havens by multinational corporations based in the United States. But state policymakers don’t need to wait for Congress to act. Legislators could enact relatively straightforward changes to the state’s corporate tax code that would ensure corporations pay taxes on the profits generated in Maine.
For more information and to read the full four-page issue brief, click here.