MTA joins call for closing corporate tax loopholes

The MTA has joined a coalition of education, civic and social service organizations and unions in urging the Legislature to close corporate tax loopholes that cost the state hundreds of millions of dollars a year and shift the tax burden onto individuals and property owners. MTA members are being asked to let their legislators know that they support this effort.

The coalition has increased its calls for reform in anticipation of the release in early December of a report by a Special Commission on Corporate Tax Reform, which is chaired by Gov. Deval Patrick’s budget director and includes members appointed by House Speaker Sal DiMasi, among others.
Patrick has filed legislation to close certain corporate tax loopholes in order to make the tax system fairer and to raise revenues for education, local aid, health care and other priorities. DiMasi has said that any changes in the corporate tax structure should be “revenue-neutral,” meaning he believes that tax rates would have to be cut or new tax breaks adopted if closing loopholes yielded new revenues.

In a letter to legislators this week, MTA and the other organizations noted, “The state is facing serious challenges: making health reform work; creating the kinds of schools our children need to prepare for the economy of the future; repairing our infrastructure; preserving our parks and recreation facilities; and maintaining public safety programs. Any money spent on a corporate tax cut would be money not available to meet the real challenges the state faces.”
The letter states that one of the largest single tax avoidance provisions in our code allows big businesses to artificially attribute income earned in one state to another state – invariably to one that has low or no corporate taxes. This practice is ended when states require corporations to file “combined reporting” returns, meaning they have to accurately reflect how much income they earned in the states in which they operate.
Currently, 22 states have adopted combined reporting laws, including neighboring New Hampshire, Maine, Vermont and New York. Adopting combined reporting would bring Massachusetts an estimated $220 million in revenue that is now being lost to a legal, but unproductive and unfair, tax dodge.
According to the State House News Service, The commission plans to discuss a draft outline of its final report on Dec. 5, then vote on a final report on Dec. 18.