Phineas
Baxandall, Ph.D.
Senior
Analyst for Tax and Budget Policy
Corporate
Tax Code Commission
Gardner
Auditorium
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.
