MASSPIRG testifies before the Corporate Tax Commission in favor of closing tax loopholes
Corporate Tax Commission
Phineas Baxandall, Ph.D.
Senior Analyst for Tax and Budget Policy
Corporate Tax Code Commission
Massachusetts State House
Thank you for the opportunity to address the Commission. My name is Phineas Baxandall, Senior Analyst for Tax and Budget Policy for MASSPIRG and other affiliated Public Interest Research Groups across the United States. Previously, I served as a Lecturer at Harvard University and on staff of the Rappaport Institute for Greater Boston at Harvard’s Kennedy School of Government.
MASSPIRG is a non-profit, non – partisan public interest advocacy organization with 40,000 members across the state. I am here today to urge you to support the closing of the tax loopholes which Governor Patrick filed earlier this year.
In-state businesses are playing on an uneven field, competing against multi-state companies that use high-priced, sophisticated accountants and complex transactions with subsidiaries to avoid paying Massachusetts taxes. While currently legal, some multi-state businesses can shift their Massachusetts profits to out-of-state subsidiaries to avoid paying taxes here; while businesses located only in Massachusetts cannot take advantage of these loopholes or other tax shell games.
Businesses should thrive based on their efficiency and innovation, not their opportunities for ‘creative’ tax accounting and tax avoidance.
The existing tax loopholes, totaling over $500 million a year, allow mostly out-of-state businesses to avoid their fair share of taxes. That leaves the vast majority of businesses at a competitive disadvantage. It also leaves taxpayers – both businesses and individuals – to foot the bill for vital services including transportation, education, and public safety.
My testimony today will focus on one of the specific tax reforms that is most significant because it would effectively close a thousand loopholes at once: combined reporting. As I will explain, combined reporting is a common-sense modernization of the tax code that has become best practice across the United States and ought to be adopted in Massachusetts.