Many-Large-MA-Corporations-Pay-Only







The Commonwealth supports corporations in countless ways. For
their
long-term success and year-to-year profits, corporations rely on a
dependable legal system, a healthy and educated workforce, a
transportation system that brings goods to market, and more. We pay for
all these crucial programs and services chiefly through taxes.
Corporations have an important role to play in contributing their own
tax dollars toward these efforts.




In response to the many ways corporations avoid taxes, states have long
established minimum corporate excise taxes as a backstop to ensure all
corporations pay some income tax regardless of how much they report in profits. The Massachusetts corporate minimum
tax has not been changed in 30 years. Since 1989, the minimum tax for
corporations regardless of their size has been $456.1 Several
other states target their minimum corporate taxes so that businesses
with larger volumes of sales pay larger minimum amounts.




The Commonwealth’s corporate minimum tax is widely used, even
by many very large corporations:





  • 70 percent of all businesses
    that filed corporate excise taxes in Massachusetts paid the minimum
    $456 in 2015.2


  • Similarly, an analysis of year
    2000 tax data cited by the Commonwealth’s Study Commission on
    Corporate Taxation found that 37 percent of corporations reporting more
    than $10 million in gross receipts paid the minimum excise.
    Additionally, 20 percent of the state’s largest 50 employers
    paid the minimum excise.3


  • The Department of Revenue
    showed that, in 2004, there were 2,283 companies with gross receipts
    over $50 million that paid the corporate minimum tax — a
    third of all such companies. Of this group, 207 companies had annual
    sales over $1 billion and paid only the minimum tax. This represented
    24 percent of all companies with a billion dollars in sales.4


  • A study by the Institute on
    Economic and Tax Policy, based on companies’ 2015 filings to
    the Securities and Exchange Commission, found at least two dozen
    profitable Fortune 500 companies paid no state income tax other than
    the corporate minimum.5




Revenue collections from the minimum tax in 2015 totaled about
$55.9
million.6



States such as New York, New Jersey, and Oregon target their
corporate
minimum taxes so that businesses with larger volumes of sales pay
larger minimum amounts. In New York, for example, the minimum corporate
tax tops out at $200,000 for companies with over $1 billion in New York
receipts.7



__________________________



1See Department of Revenue 830-CMR 23B.2.2 at
https://www.mass.gov/regulations/830-CMR-63b22-payments-of-estimated-corporate-excise-for-taxable-years-ending-on-or
. See also MassBudget, “Gone with the Wind: The Vanishing
Corporate Income Tax,” p. 23 at
http://www.massbudget.org/reports/pdf/gonewithwind_final.pdf



2A total of 112,495 of all 161,598 businesses paying the
corporate excise paid the minimum. See Massachusetts Department of
Revenue, “A Report on 2015 Corporate Excise
Returns.” This is the last year for which the Department has
published data. See “Excise due” row at Table 3,
page 25 at
https://www.mass.gov/files/documents/2018/12/21/dor-reports-2015-corp-excise-returns.pdf.




3Commonwealth of Massachusetts, Study Commission on Corporate
Taxation, “Final Report,” December 28, 2007,
Appendix M, page 219 at
https://massdocs-digital-mass-gov.s3.amazonaws.com/s3fs-public/2018/study-commission-corp-taxation-final-report.pdf?1ha3NhIPPBDLTKSdHsez18PGriEjyLMk



4See Appendix M, page 219 at
https://massdocs-digital-mass-gov.s3.amazonaws.com/s3fs-public/2018/study-commission-corp-taxation-final-report.pdf?1ha3NhIPPBDLTKSdHsez18PGriEjyLMk




5The SEC filings list the amount of total taxes paid to all
50 states as a group, but do not disclose tax payments to individual
states. Thus, many more Fortune 500 corporations may have avoided
paying corporate income taxes specifically to Massachusetts. See
Institute on Taxation and Economic Policy, “3 Percent and
Dropping: State Corporate Tax Avoidance in the Fortune 500,”
(April 2017), page 2 at
https://itep.org/wp-content/uploads/statecorpstudyv2.pdf/.



6Massachusetts Department of Revenue, “A Report on
2015 Corporate Excise Returns.” This is the last year for
which the Department has published data. See “Excise
due” row at Table 3, page 25 at
https://www.mass.gov/files/documents/2018/12/21/dor-reports-2015-corp-excise-returns.pdf



7In New York, the minimum is $500 for companies with between
a half million to a million dollars in New York receipts; a $1,500 tax
for receipts above $1 million but not over $5 million; a $3,500 tax up
to $25 million; a $5,000 tax up to $50 million; $10,000 tax up to $100
million; $20,000 up to $250 million; and $50,000 tax up to $500
million; $100,000 up to $1 billion; and $200,000 over $1 billion. See
“fixed dollar minimum tax” schedule on page 9 at
https://www.tax.ny.gov/pdf/current_forms/ct/ct3i.pdf .  In New
Jersey, the minimum Corporation Business Tax ranges from $500 for a
corporation with gross receipts less than $100,000, up to $2,000 for a
corporation with gross receipts of $1 million or more. In Oregon the
minimum tax spans from $150 for corporations with sales under $500,000
and reaches $100,000 for companies with sales of $100 million or more.
See Tax Administration, “Range of State Corporate Income Tax
Rates” as of January 1, 2019, at
https://www.taxadmin.org/assets/docs/Research/Rates/corp_inc.pdf .
Starting in 2020, Oregon will also have a separate corporate tax that
applies only to Oregon receipts exceeding $1 million. See
https://olis.leg.state.or.us/liz/2019R1/Measures/Overview/HB3427 .











Scroll to Top

Get news from Massachusetts Budget and Policy Center in your inbox.

Select list(s) to subscribe to


By submitting this form, you are consenting to receive marketing emails from: Massachusetts Budget and Policy Center, 1 State Street, Boston, MA, 02109, http://www.massbudget.org. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact