Portland Press Herald

Maine’s corporate income tax receipts took a hit in the fiscal year that ended June 30, but it wasn’t because of the economy.

A trio of tax cuts adopted in 2011 kicked into full gear over the past year and a half, saving businesses a total of $60 million.

The cuts sliced the state’s corporate tax take from $232 million in fiscal year 2012 to nearly $172 million in fiscal year 2013, according to figures released this week from the Maine Controller’s Office.

Michael Allen, Maine Revenue Service’s associate commissioner for tax policy, said state officials can’t say how much of the reduction each tax change is responsible for because they are still sorting through some of the larger corporate filings. Other companies may have sought filing extensions and therefore don’t need to file returns until October. Until all that is calculated, he said, tax officials can’t say how many businesses took advantage of the tax cuts and how much they saved.


Allen said the largest reduction is likely the result of a tax credit that lawmakers enacted for businesses making Maine investments. He said lawmakers were seeking to duplicate the federal government’s accelerated depreciation rule, which allows businesses to claim a larger depreciation in the first year after making an investment, with a lower depreciation later on. If Maine had adopted the federal rule, Allen said, it wouldn’t have been able to differentiate between investments made in Maine and those made elsewhere, so lawmakers adopted a tax credit that targeted only Maine investments.

He said the state also adopted the federal government’s section 179 write-off for business investments. That provision allows businesses to write off the full cost of equipment purchases, particularly technology, in one year instead of over a three-year period.

It’s a popular provision for some small businesses because it can be used to quickly offset some of the expense of common equipment purchases, such as computers.

Previously, Maine didn’t follow the federal rule, requiring companies to add back the section 179 write-off that they had made on their federal returns.

The 2011 tax cuts basically gave businesses the same break on state taxes that they were getting on their federal returns.

Another tax law change allows business to carry forward a net operating loss, meaning that losses in one year can be used to offset a tax liability in future years.

State budget officials had calculated the effect of the cuts in their estimates, and the preliminary figures suggest that corporate income tax receipts for the past year actually were nearly $1 million over budget.

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