State Sen. Heather Steans, D-Chicago, introduced legislation this week that will crack down on corporations shifting their profits to offshore tax havens.
Her measure would convert Illinois’ corporate tax system from mandatory “water’s edge” combined reporting that includes only companies with more than 20 percent of their business activity in the United States to a default worldwide combined reporting requirement.
Steans said at a press conference today that her legislation will provide much-needed revenue for Illinois.
“We want a fair income tax. That’s going to take time, but we need revenue for our state now,” Steans said. “This is one part of a solution, but it’s a critical one.”
Under current law, businesses are able to shift profits to related companies in other countries with low or no tax requirements in order to decrease their tax liability.
Steans’ legislation allows businesses to continue using the current reporting requirements but eliminates their ability to deduct 100 percent of their dividends from foreign subsidiaries. They will also have to include in their report a list of subsidiaries doing business in a specific list of low- or no-tax countries.
Senate Bill 1115 was introduced on Tuesday and has been assigned to the Senate Revenue Committee.