The bill, which has to pass each chamber once again, is expected to recover some $10 million annually, according to Senate Democrats. The measure passed the Senate on Wednesday after the House approved it Tuesday. The bill is relatively simple: It requires corporations to report income from a list of 38 known offshore tax havens, a portion of which would be taxed by the state.
A decade ago, Montana became the first state to implement such a policy, according to a January report from U.S. PIRG, a consumer-interest group. Last summer, Oregon implemented a similar policy. Corporations are required to report profits of their subsidiaries in 23 states, but only Montana and Oregon close the so-called “water’s edge” loophole by declaring lists of known tax havens from which taxes can be recovered. The Maine bill would do the same.
In 2010, Montana recovered $7.2 million, while state analysts expect Oregon to recover $18 million this year. The problem costs states about $1 billion, according to the PIRG report. The nation loses anywhere from 10 to 90 times as much annually in federal taxes, according to a report from the nonpartisan Congressional Research Service.