Every year, states lose an estimated $20 billion through corporate use of offshore tax havens.
If we prevented these multinational corporations from exploiting these havens to evade the taxes they owe here in Maine, our state would see an additional $10 million in revenue each two-year budget period. The Legislature recently passed a bill to close a loophole that allows large international companies to evade paying their fair share of taxes. L.D. 1120 would require corporations to report income from a list of 38 known offshore tax havens, including Liberia, Luxembourg and Liechtenstein. This is a common-sense measure that prevents multinational companies from hiding their corporate profits in low-tax countries such as Monaco and the Kingdom of Bahrain.
Multinational corporations dodge taxes in Maine by using accounting tricks that make it seem as though the income was generated elsewhere. This is shameful.
Every day, Mainers put on their boots, roll up their sleeves and work hard to make a living. It is wrong that, while so many Mainers struggle just to make ends meet, multinational corporations use deceptive accounting tricks to avoid paying their fair share of taxes.
It all comes down to fairness. Small businesses in Maine are not able to set up offshore accounts because they cannot afford the expensive lawyers who manipulate the law for an unfair advantage. While hardworking men and women pay their taxes and do their best financially and while many of our small businesses struggle, big corporations continue to prosper and rake in earnings with a lower tax obligation because of loopholes like the one this bill seeks to close.
Consider this: the largest U.S.-based multinational companies have accumulated $1.95 trillion in profits outside of the United States.
Maine and American companies need to be on an even playing field with large multinational firms that use foreign countries to unfairly hide taxable income from the federal government and from Maine. The money we lose out on every year could go to rebuilding our infrastructure and supporting our local schools.
L.D. 1120 does not create a new tax on companies. It simply makes sure that large corporations pay their fair share, just as Maine taxpayers pay theirs. In fact, Maine already has domestic tax evasion checks in place to prevent corporations from hiding money in such states as Delaware and Nevada.
The governor vetoed this crucial legislation on Monday. I hope that lawmakers stand up for Maine’s small businesses, communities and taxpayers, and override the veto.
Rep. Brian Jones, D-Freedom, is serving his first term in the Maine Legislature and represents House District 45. He serves on the Agriculture, Conservation and Forestry Committee.