Legislature Closes Corporate Tax Loopholes,
Delegation Applauds Reform
BOSTON – Medford’s legislative delegation announced today the final passage in both the Senate and House of Representatives of legislation closing corporate tax loopholes, reducing the corporate tax rate, and clarifying the corporate tax code.
The bill originated to close loopholes that large corporations have used in the past to avoid paying state income taxes. These loopholes included allowing corporations to shift profits out-of-state and to define the corporation differently on state and federal tax forms.
“These loopholes have shifted the tax burden onto local small businesses that cannot take advantage of them and onto Massachusetts working families, who have seen their property taxes rise year after year,” said Representative Carl Sciortino. “I made this issue a top priority this session, and I was proud to work with the rest of the delegation and my colleagues in the House to ensure that the final bill will help small local businesses compete while ensuring that multi-state corporations pay their fair share.”
“This legislation modernizes our tax code and makes it more fair for all businesses,” Senator Pat Jehlen said. “We will bring more revenue into the state while saving many small businesses significant money as the rate is reduced from 9.5% to 8%.”
The original corporate tax bill that passed in the House reduced the corporate tax rate to 7.5% over three years, while the Senate version of the bill went down to 8%. In the end, the Senate’s version of the tax cut was adopted.
“I am pleased with the outcome of this legislation that sends a strong message that small business owners are integral parts of our communities and large corporations must pay their fair share of the tax burden”, said Representative Paul Donato.
Another difference between the House and Senate bills was a controversial provision in the House bill that would allow corporations with overseas operations to shift their profits to foreign countries. This loophole has been exploited by corporations such as Wal-Mart, who tried to avoid paying taxes in Illinois through trusts and subsidiaries based in Italy. The provision was not included in the final legislation.
“Closing corporate tax loopholes is about equity,” said Representative Sean Garballey. “It’s one of the few solutions which does not put an undue burden on the people of the Commonwealth.”
The loophole closures will go into effect beginning January 1, 2009. The tax cuts will be phased in over 3 years beginning January 1, 2010.
wrtiiten by Daniel Glasser,