BOSTON – When big companies avoid taxes by using offshore tax havens, small businesses are forced to pick up the slack for those lost revenues. A new national survey found that Massachusetts ranks fourth-highest in the nation for the impact of that additional burden on local businesses.
The report by the MASSPIRG Education Fund said the amount of money corporations book to offshore tax havens is growing. And According to MASSPIRG legislative director Deidre Cummings, that leaves small businesses in the Bay State picking up a big portion of the tab.
"In Massachusetts, the average small business pays an extra $5,845 to compensate for that money that big multinational companies are stashing offshore,” Cummings said.
Supporters of the tax loopholes say they would not be necessary if the U.S. would reduce the top tax rate. And President-elect Donald Trump has proposed cutting the top corporate tax rate to 15 percent.
But Cummings said that, in practice, most big corporations already pay less than that. She said multinational corporations and wealthy individuals avoid an additional $147 billion in federal and state taxes every year.
Trump has also proposed a one-time tax of 10 percent on money parked offshore to entice companies to bring that money back to the U.S. Cummings said these kinds of tax reforms need to be comprehensive and close loopholes to prevent future tax-haven abuse.
"Sure, this time we could do a discount or we could figure out different mechanisms to bring it back in,” Cummings said, "but it only helps the average taxpayer and the small business if we close that loophole door permanently."
Offshore tax havens allow big businesses to benefit from the nation's infrastructure without paying the taxes necessary to support it, Cummings said.
"Large multinational companies can thrive because we have security, we have roads and bridges,” she said; "and it's really not fair that the small businesses and the average taxpayer pays for that, and the large multinationals - who you could argue benefit the most - are avoiding that."
According to the report, small businesses in the District of Columbia shoulder the largest tax burden in the nation - more than $7,000 per year in extra federal and state taxes as a result of tax-haven abuse.
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A new report brands Connecticut's tax system as "regressive" for low- to middle-income residents and uses a report from the state to make its point.
The Connecticut Voices for Children report reviewed the state's Tax Incidence Study, in which one of the biggest findings is how property taxes contribute to a regressive system. Because a town's mill rate does not adjust based on a tax filer's income, low- to middle-income residents spend more on housing as a percentage of their budget than those with higher incomes.
Patrick O'Brien, research and policy director of Connecticut Voices for Children and the report's author, pointed out Connecticut could have a more fair tax system by implementing a few policy changes.
"One, eliminate and/or close the state's tax gap, which was shown likely primarily benefits high-income and wealthy tax filers. Two, eliminate and/or reduce regressive tax expenditures. And three, possibly increase personal income tax rates on high-income and wealthy tax filers," O'Brien outlined.
He argued the new revenue could then be used to provide tax cuts for lower and middle-income households, and could help with creating a state-level child tax credit. One thing to note is the state's report was based on data from 2020.
O'Brien acknowledged the state has made changes to its tax system since then but the Connecticut Voices for Children report showed despite the new cuts, the tax system is still regressive.
The report detailed the effects of the state tax system beyond its residents. Connecticut has only recently come in second behind Massachusetts for income inequality.
O'Brien emphasized it is only exacerbated by the regressive tax system.
"This is really hurting the economic well-being of the state's low- and middle-income tax filers, and that, in turn, ultimately ends up hurting economic growth in the state as well," O'Brien contended. "It can have multiple effects that we're trying to address."
The report recommended creating a task force to ensure all future reports from the Department of Revenue Services have all the required information to get a thorough picture of the state tax system. The most recent report faced criticism for lacking some data.
Disclosure: Connecticut Voices for Children contributes to our fund for reporting on Budget Policy & Priorities, Children's Issues, Education, and Juvenile Justice. If you would like to help support news in the public interest,
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While three initiatives received the go-ahead to appear on Washington's November ballot at the end the legislative session last week, three that have already been approved could also have a big impact on the state.
These measures could have an especially big effect on funding in the state. Executive director of Fuse Washington, Aaron Ostrom, said they also have a few more things in common.
"They're all funded by the same Republican mega donor, Brian Heywood, and all sponsored by the MAGA Republican Party Chair Jim Walsh," said Ostrom. "The second thing about them is that all three are deliberately deceptive and misleading. And then the third thing about these three is they all seek to cut billions of dollars in funding for critical public priorities."
The initiatives would repeal the state's capital gains tax, undo the Climate Commitment Act, and would make optional the WA Cares program - which helps people save for long-term care.
Heywood says he's backing these measures because no one in the state is challenging Democrats on taxes and other policies.
Ostrom said the initiative that would repeal the capital gains tax for profits of more than $250,000 - which fewer than 4,000 people paid last year - would leave a big hole in the state's budget, costing nearly $900 million a year.
"Initiative 2109 would repeal the capital gains tax," said Ostrom, "which would take billions of dollars in funding from child care and schools to give a tax cut to Washington's wealthiest."
Supporters of I-2109 say it is essentially an income tax, which is barred in the Washington state constitution. However, the state Supreme Court upheld the tax as constitutional in a ruling last year.
Ostrom said he believes all three initiatives are a threat to the state.
"These three initiatives would devastate funding for our kids and schools," said Ostrom. "They would dismantle our protections against air and water pollution, and they repeal efforts to care for our seniors."
Disclosure: Fuse Washington contributes to our fund for reporting on Climate Change/Air Quality, Health Issues, Human Rights/Racial Justice, Social Justice. If you would like to help support news in the public interest,
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Virginia child advocates are calling on state lawmakers to improve school funding.
The concern grew when several bills focused on building up school mental health failed in their respective General Assembly committees. The state is ranked 48th for youth mental health by Mental Health America.
Cat Atkinson, mental health policy analyst at Voices for Virginia's Children, said given the ongoing youth mental health crisis, now is the time for action.
"Having mental health professionals in our schools creates a space where, one, our young people are able to be where they're comfortable," Atkinson recommended. "They have built relationships with staff and are able to be in their schools, and to be able to have their needs met in a place where they are consistently."
The mental health staff funding bills failed or were continued to the 2025 session due to high costs. Combined, the bills would have called for around $120 million to be spent in the 2025 and 2026 budgets.
Beyond money, a long-term workforce shortage is depriving schools of having proper mental health staff. A KFF report found 48% of schools nationally have insufficient access to licensed mental health professionals.
The funding inconsistencies affect more than just mental-health services. A 2023 report found not only are school divisions getting less funding than most other states, but Virginia is still using the Great Recession as a benchmark for cost-reduction measures.
Atkinson pointed out a lack of funding affects not just schools.
"The trickle-down effect of our state underfunding public schools places a burden on the local communities," Atkinson argued. "Which leaves the quality of our young people's education to depend entirely on the neighborhoods they reside in."
She added the current situation is not equitable because community resources across regions vary significantly, but noted there are other ways to get mental health care in schools.
In 2023, the General Assembly passed Senate Bill 1300, which requires teachers to get trauma-informed care training every three years. Gov. Glenn Youngkin's Right Help, Right Now plan would also bolster school and community mental health needs.
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