AUGUSTA — Lawmakers in the Legislature’s Democratic majority were urging Republican Gov. Paul LePage not to veto a tax-reform bill that they say closes loopholes in state law that allow multinational corporations to evade Maine income taxes.

House Majority Leader Seth Berry, D-Bowdoinham, along with a host of Democratic colleagues, including those who serve on the Legislature’s Taxation Committee, stood in the State House Hall of Flags on Wednesday to herald a bill, LD 1120, that they say could save Maine up to $5 million a year.

“Governor, will you choose Lichtenstein or Livermore Falls?” Berry asked. “Will you choose the Kingdom of Bahrain or Kennebunk? Will you choose Luxembourg or Lewiston? Will you choose Monaco or Millinocket?”

The measure, which requires corporations that file unitary income tax returns in Maine to include income from certain jurisdictions outside the United States in net income when apportioning income among tax jurisdictions, passed in both the House and the Senate on mostly party-line votes.

“The Maine Revenue Services estimates that we could lose $10 million each budget cycle, thanks to the accounting tricks of huge multinational corporations,” said state Rep. Adam Goode, D-Bangor, House chairman of the Taxation Committee. “There is plenty we could do with $10 million.”

Goode said the money could be used for revenue-sharing with cities, on Head Start and other early childhood programs, on helping pay for senior prescription drug programs or for clean-elections funding.

“Maine is scraping the bottom of the barrel and squeezing important programs with our budgets,” Goode said. “We would be doing a disservice to Maine people, small businesses and communities by ignoring these tax-haven loopholes.”

Goode said the bill simply builds upon the state’s existing tax-evasion laws that prohibit corporations from hiding money in other states, including Nevada and Delaware. “Why should we turn a blind eye when it comes to Liberia, Lichtenstein and Luxembourg?”

State Sen. Anne Haskell, D-Portland, said there was no reason not to pass the bill into law. “It’s time that we leveled this playing field and make sure the same corporations that are hiding money in offshore accounts are stepping up to the plate and are paying the taxes that Maine businesses are paying,” she said.

But Republicans, who have largely rejected the bill, said Maine doesn’t have the resources or the authority to try to regulate companies that seek tax havens in foreign countries. The issue should be left to the federal government, they said.

State Rep. Gary Knight, R-Livermore Falls, also a member of the Taxation Committee, said the bill was little more than fodder for the fall campaign season.

“It’s all about re-election,” Knight said. “Obviously, we want people who owe taxes to pay their fair share of taxes.” He said the U.S. government had treaties with the so-called tax-haven nations, and it was up to the U.S. Congress to fix the problem.

“Maine can’t stand out there on its own doing its own thing,” Knight said. “We just don’t have the skill-set here in the Maine Revenue Service to go after these folks. If they don’t pay the taxes, are we going to be sending people out to Lichtenstein and Luxembourg to negotiate settlements?”

Knight said LePage is expected to veto the measure.

“The governor certainly should and will veto this bill, so I find it kind of interesting this is even being suggested today,” Knight said. “It’s really a little bit of a joke.”

sthistle@sunjournal.com

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