The Herald Bulletin

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Columns

February 10, 2014

Maureen Hayden: Local officials not convinced on Pence tax reform

INDIANAPOLIS — Indiana Gov. Mike Pence has spent several months pushing the idea of repealing the business personal property tax that provides $1 billion-a-year revenue stream for schools, libraries and local governments.

But he’s yet to come up with a plan for replacing those lost dollars.

He’s argued generally that freeing businesses from the burden of paying taxes on their equipment will spur economic growth. And that, in turn, will lead to prosperity that will boost the fortunes of local communities.

Elkhart County Commissioner Mike Yoder has another idea: To replace the revenue lost by the locals, the state should go after the dollars lost in offshore tax havens used by businesses to dodge paying their taxes.

“Why aren’t we recouping some of that tax revenue?” Yoder said. “The state could go after that money and turn it over to the locals as replacement revenue.”

It’s a question asked only half in jest. According to a new report published in Governing magazine, state governments failed to collect more than $20 billion in tax revenues in 2011 from corporations that socked the money away in the Cayman Islands and other well-known tax havens.

The report, by the U.S. Public Interest Research Group, identified 31 states that saw more than $100 million in corporate tax revenue go uncollected in 2011. Indiana is one of those: it lost $463 million to offshore tax havens, according to the INPIRG report.

Only two states, Montana and Oregon, have passed legislation to recoup some of that money, by requiring companies to report profits from subsidiaries in select foreign countries known for their tax-dodging loopholes. The INPIRG report speculates on one reason why more states haven’t moved on the issue: Well-funded business groups employ ample resources to oppose tax reforms.

Whatever the reason, the proposal from Yoder is compelling for another reason.

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