Wisconsin Legislature Closes Corporate Tax Loopholes

Following a trend among other states in recent years, the Wisconsin Legislature, as a part of a state stimulus package on Feb. 18, closed a number of corporate tax loopholes that some multistate companies use. “Combined reporting,” as the tax modernization is called, levels the playing field between businesses by preventing companies from using out-of-state subsidiaries to avoid paying their taxes. This method simplifies and modernizes taxation by making complex practices of hiding profits using out-of-state subsidiaries ineffectual.

Click here to read our press release celebrating the new law.

No tax loopholes for hedge fund billionaires

Call your representatives and urge them to support the Temporary Tax Relief Act of 2007 in its current form to help ensure equality in the tax code. Click here to take action.

Loopholes in state tax codes allow mostly out-of-state businesses to avoid their fair share of taxes. As a result of these loopholes, in-state businesses are playing on an uneven field, competing at a disadvantage against multi-state companies that use high-priced accountants and complex transactions with their subsidiaries to avoid paying their fair share. Businesses should thrive based on their efficiency and innovation, not their opportunities for ‘creative’ accounting and tax avoidance.

WISPIRG supports the closing of corporate tax loopholes through reforms such as “combined reporting.” Companies with affiliates and subsidiaries declare all their profits and then assess which income they should pay taxes on based upon their business activity in each state. Combined reporting has been enacted in 23 states, which comprise 55 percent of the U.S. economy. The practice also takes tax authorities out of the business of sifting through complicated transactions between companies subsidiaries. Taxation is made simpler since paying one’s own affiliates will no longer affect a corporation’s tax bill.