Weekly Round-Up: The Erosion of the States' Tax Base—A Whopper of a Problem?


In the past 10 years, there has been a surge in corporate inversions, with 47 companies engaging in these transactions between 2004 and 2014, Bloomberg BNA State Tax Law Editor Radha Mohan writes in this week’s issue of the Weekly State Tax Report

However, inversion transactions are only the tip of the iceberg, as corporations use a variety of mechanisms to shift income abroad, leaving the states and the federal government with a dwindling tax base, according to Mohan.

While advocates on both sides of the issue debate the merits of how states should go about preserving their tax base, many states may consider employing mechanisms they have used before such as addback statutes, tax haven legislation and worldwide combined reporting, Mohan explains.

Mohan’s article, which can be read in its entirety here, explores how states are addressing income-shifting strategies used by multinational corporations and examines the effectiveness of employing these methods to combat the effects of corporate inversions as well.

Some notable developments from the State Tax Developments Tracker – Bloomberg BNA’s new tool for monitoring important developments in all the states:

West Virginia State Tax Department Provides an Overview of Its Voluntary Disclosure Agreements

North Carolina Department of Revenue Publishes NewsRegarding 2014 North Carolina Individual Income Tax Law Changes

Massachusetts Department of Revenue Issues Working Draft TIR 14-XX on Tax Changes Contained in an Act Promoting Economic Growth Across the Commonwealth

For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library. 

In other developments…

Tracking the myriad of changes in abandoned and unclaimed property, featuring Delaware legislative changes and events (Issue 10, October 2014), by PwC

Legal Alert: MTC Meets With Economic Firms to Continue Its Transfer Pricing Effort, by Sutherland

How High Are Cell Phone Taxes In Your State?, by the Tax Foundation

Compiled by Priya D. Nair

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