AUGUSTA — Maine lawmakers gave the first nod on Tuesday to a bill aimed at preventing corporations from avoiding paying taxes by stashing their profits in overseas tax havens — a move that could generate millions in extra revenue for the state, supporters said.
The measure is targeted at multinational companies that hold their Maine-made profits in locations like Bermuda and the Cayman Islands with low tax rates and would require those companies to include profits held overseas when reporting their corporate income tax.
Supporters said that the bill is a no-brainer that would bring Maine $10 million more in tax revenue every two years and level the playing field for small businesses that don’t take advantage of such loopholes. The Democratic-controlled House approved the bill in an 86-58 vote, but it faces staunch opposition from some Republicans who labeled it as a tax increase and contend it will discourage future business investment.
“We are interfering in international tax laws well beyond our purview,” said Rep. Gary Knight, a Republican from Livermore Falls. Knight called the measure “the worst piece of legislation” he’s seen during his eight years on Maine’s Taxation Committee, which endorsed the bill in an 8-5 vote last month.
It faces further votes in the House and Senate before being sent to Republican Gov. Paul LePage, whose office doesn’t comment on pending legislation.
Tech company Apple Inc. has been at the center of the national debate over tax avoidance strategies after the U.S. lawmakers released a report last summer estimating that the company avoided at least $3.5 billion in U.S. federal taxes in 2011 and $9 billion in 2012 by using Irish subsidiaries. The company has denied relying on tax gimmicks and says it pays all the taxes it owes.
Oregon and Montana, which have passed similar laws, haven’t faced legal challenges and have been able to recoup millions of dollars in corporate tax revenue without discouraging businesses from remaining there, said Rep. Adam Goode, a Democrat from Bangor who’s sponsoring the measure. Supporters emphasized that reworking the tax code would bring much-needed revenue to Maine, which is consistently battling budget shortfalls.
“Let’s look at this the way we should be looking at this. Let’s look at this as a boon for the state of Maine,” said Rep. Joseph Brooks, an unenrolled member from Winterport.