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Anti-Tax-Loophole Plan Has More Loopholes, Analysts Say

June 16, 2008

Boston, MA - When it comes to closing loopholes, the tighter the knot, the better. That's what some budget analysts are saying about a plan that would make it harder for businesses to avoid state taxes. They're especially concerned that a Massachusetts House amendment to the plan would undo the "knot."

The governor originally proposed the tax reform package, which is estimated to bring in more than $400 million to the state. But Deirdre Cummings, budget policy and legislative director for the Massachusetts Public Interest Group (MASSPIRG), says the new House version cancels out most of those gains.

"The legislature adopted a business-supported amendment, which added a number of new corporate loopholes to the very measure that was designed to end corporate tax avoidance."

For example, says Cummings, one new loophole would allow businesses to shift profits to subsidiaries that do much of their business overseas, in order to avoid paying taxes on those profits in Massachusetts. Another would give businesses tax breaks - for the taxes they'd owe as a result of the new reforms.

Opponents of changing the corporate tax structure see it as a tax increase, and say it's bad for business. But supporters say companies that do business in the state should pay their fair share toward infrastructure and other improvements. These items benefit them too, adds Cummings.

"We will have everybody paying for those services that both business and consumers rely on to have a strong economy - things like education, our roads and bridges, and security."

A six-member legislative conference committee is expected to be finished ironing out the differences in the next two weeks.

Kevin Clay/Craig Eicher, Public News Service - MA