Can Maine Head The Plutocrats Off At The Pass-- Or At Least At The Waters' Edge?

I was reading the other day that one of the poor, benighted states controlled by Republicans is about to pass a bill allowing for campaign contributions from foreign nationals, not dual citizens like Israeli agents Sheldon and Miriam Adelson, but full blown foreigners with a position they want to see supported in the U.S. Congress. The laws are lax enough-- just look at the Republican running against Mike Honda, Vanila Singh, who is apparently being funded by Indian fascist Narendra Modi through Chicago cutout Shalabh "Shalli" Kumar-- without Ohio or Wisconsin or whichever state it is doing even more damage to the basic premises of American democracy. And right afterward I read that Reince Priebus, chair of the Republican National Committee, is agitating for the GOP's Supreme Court to strike down all contributions to whatever anyone wants to give to bribe the politician of their choice. "I don’t think we should have caps at all," he told Hate Talk Radio host Hugh Hewitt Tuesday.

Plutocrats and GOP predators agree with Priebus, of course, but most normal Americans don't. Last June Gallup found that a staggering 80% of Americans would vote to limit the amount of money congressional candidates could raise and spend on election campaigns. Even a majority of admitted Republican voters agree, although, obviously, their hive-mind could be changed with a week of Koch-funded advertising.

Last week, Maine's state legislature made a move in the direction of just saying NO to the plutocrats and taking back our democracy for the people. Abigail Field reported on the development for Benzinga.com. "While Congress," she wrote, "cowers before multinationals’ lobbyists and moves to re-enact loopholes that let corporations like GE and Apple hide their income from the IRS, the Maine Legislature decided it had enough. On Friday, April 4, Maine passed legislation that will end some of the games." A state legislature? How can they do anything? Well, with the U.S. House of Representatives totally owned by the plutocrats and unwilling to do anything that will displace them, a movement to take back the country can only get started at a state level.

“I would like the Governor to sign the bill,” said Rep. Adam Goode, the sponsor of the legislation. “The bill is about huge multinational corporations that hide their income in off shore tax havens. Small businesses in Maine don’t use these tricks. That puts Maine’s small businesses at a competitive disadvantage.”

Governor LePage has ten days to sign the bill into law, veto it, or let it become law without his signature. According to Maine Revenue Services, closing the “Water’s Edge” loophole will raise $10 million for every two year budget cycle.

“In Maine $10 million is a lot of money,” said Rep. Goode. If the Governor vetoes the bill, “we’re sending a message that we’re prioritizing multinational corporations’ access to tax havens over kids access to head start or seniors’ access to prescription drugs. Those programs are routinely on the chopping block.”

Companies can dodge taxes by shifting income to low-tax jurisdictions. Not only do they send the money to tax havens off shore, but they also set up companies to hide income in low tax states, such as Nevada and Delaware. Twenty-three states and the District of Columbia countered stateside tax avoidance by “combined reporting.”

Combined reporting requires companies to report their income in all states; then the combined income is taxed in proportion to the business’s activity in their state. That way, if large amounts of income that were produced by business activity in, say Maine, but were reported for tax purposes as belonging to Delaware, it would be included in the total income pie that Maine would proportionately tax.

But if combined reporting stops at “the Water’s Edge," it only includes income reported within the United States. To get at offshore tax havens, the states can require worldwide combined reporting, or Water’s Edge plus a list of known tax havens.

Maine, like Montana and Oregon, has taken the latter approach. Rep. Goode’s bill includes a list of 38 known tax havens.  Goode noted that Maine already uses combined reporting to stop corporations from hiding their money in low tax states like Delaware or Nevada. “If we won’t let corporations hide their money in Delaware, why would we let them hide it in the Cayman Islands or Bermuda?”

According to a U.S. PIRG report on how multinationals’ tax avoidance hurts states and how ending the Water’s Edge loophole would help, in the 1970s and 1980s several states required combined worldwide reporting. After the U.S. Supreme Court upheld its legitimacy, multinationals turned to lobbying and succeeded in changing state laws.

As a result, most states with combined reporting allow waters’ edge reporting, and most of the handful that require  multinationals to add income from tax havens do it ineffectively. Instead of a clear list of 38 tax havens, like the Maine bill on Governor LePage’s desk, those laws invite litigation by failing to clearly define “tax haven” or otherwise fail to reach all tax haven income, according to the U.S.PIRG report.

By Sunday, October 16, LePage can sign the bill into law, veto it-- which he will likely do-- or let it pass without a signature. I know Republican Senator Susan Collins says she doesn't interfere in state matters-- although she did quietly lobby Republican allies in the legislature to oppose expanding Medicaid-- but this is a matter she knows a lot more about that LePage does. She endorsed his reelection bid. I wonder if she's telling him how to handle this one. We sure know how her progressive opponent, Shenna Bellows, would handle it. Last night she told us: "It's time for the country's largest corporations and wealthiest individuals to pay their fair share of taxes. The Maine Legislature took a critical step forward today in passing a bill that would require multinational corporations to report their income across all 50 states and 38 known tax havens outside the country. Closing the 'Water's Edge' loophole would generate millions of dollars of greatly needed revenue for the state. It's a matter of fairness. The wealthiest corporations in this country should not be allowed to hide their income in off-shore tax havens and avoid fair contributions to education, infrastructure and the other investments in our economy that benefit everyone."