A letter signed by 33 Democratic Representatives was sent to members of the Appropriations Committee yesterday, ahead of the presentation of a final report by the Task Expenditure Task Force to the Committee today. The signatories urge their House and Senate colleagues to “hone your focus on those tax breaks and loopholes that are taken advantage of by corporations and big businesses.”
The letter was sent to me by one of the signatories (not my brother, Rep. Ryan Tipping-Spitz of Orono, although he did sign it) and is dated Wednesday, December 11.
The letter not only suggests that closing corporate tax loopholes should be considered before other proposals on the task force’s “menu” of tax-related budget items, but suggests that the Appropriations Committee also prioritize ending big business tax breaks as an alternative to Governor LePage’s proposed cuts to revenue sharing and programs for children. This would require the Committee to close corporate tax loopholes in excess of the $40 million originally slated to be found through the task force’s recommendations.
As I mentioned in my column over the weekend and as the Portland Press Herald noted in a recent editorial titled “Enough loopholes can be closed to spare towns,” there are numerous tax breaks on the books that mostly benefit large, out-of-state corporations, do little to help the state and can be eliminated or modified in order to offset LePage’s proposed cuts.
The Representatives’ letter makes some specific recommendations, suggesting Appropriations “focus on scaling back tax breaks for companies like Walmart and Rite Aid, breaks for big banks on portfolio management services, eliminating accounting tricks that allow large out-of-state firms – mostly oil and gas companies – to pay less in taxes, and [that it] work to prohibit the use of offshore tax havens.”
Closing the portfolio management loophole alone would save the state $26 million.
This clear stating of preferences and principles by legislators stands somewhat in contrast with Democrats’ public statements on the issue to this point. Tax task force members have mostly attempted to keep as many options on the table as possible as the Legislature begins considering the budget.
The mechanism itself – a letter from the rank and file that bypasses House Democratic Leadership – is also interesting and may signal that Representatives are already feeling pressure on the issue from constituents.
Closing corporate tax loopholes is popular and makes good fiscal sense, but the effort may face some difficulty overcoming the power and influence of corporate lobbyists, who are well paid to defend specific tax breaks that benefit their clients. As the debate now moves to the Appropriations Committee and away from the ad hoc task force, those corporations will be required to begin disclosing their lobbying expenditures.