Corporate tax loopholes reduce the revenues that are available to support the education, public safety, health, environmental, and tranportation services on which Connecticut’s families and businesses rely. Under Connecticut’s current corporate tax rules, multi-state corporations are able to artificially shift their profits to subsidiaries operating in states that do not tax businesses, enabling them to avoid paying Connecticut corporate income taxes. For several years, Connecticut has actively considered the adoption of mandatory combined reporting, a powerful tool for cracking down on common tax avoidance strategies used by multi-state corporations.
This study, based on an extensive review of public records, debunks concerns that mandatory combined reporting will impose unreasonable administrative burdens on Connecticut companies or prompt large employers to leave Connecticut. The vast majority of Connecticut’s largest employers (86%) already operate in other states with mandatory combined reporting. These requirements, already in place in most states with corporate income taxes, have not persuaded these firms to relocate their facilities.