This one-page fact sheet explains that Connecticut’s corporate tax loopholes enable large, multi-state corporations to avoid responsibility for paying their share of state taxes. The “Las Vegas loophole” in Connecticut’s tax law allows multi-state companies to artificially shift profits to subsidiaries in states that do not have corporate income taxes, like Nevada. This enables these corporations to avoid paying Connecticut corporate income taxes on their profits.
These tax loopholes drain state revenues needed for health, education, early care, transportation, public safety, and other essential services. They also put local, Connecticut-based companies at a competitive disadvantage to multi-state companies who can take advantage of these loopholes.
Combined reporting tax reform would effectively close these loopholes. Most states with corporate income taxes already have combined reporting requirements, and the vast majority of Connecticut’s largest employers (86%) already operate in other states with mandatory combined reporting. Connecticut should adopt combined reporting to restore needed state revenues and create a level playing field for local businesses.
