The Joint Committee on Revenue heard several hours of testimony on an act to combat offshore tax avoidance and proposals to increase the portion of global intangible low-taxed income (GILTI) included in Massachusetts corporate taxable income.

Supporters said the change would recover substantial revenue that could shore up education, food-assistance and other state programs, while opponents said some draft language — notably a proposed “tax-haven blacklist” — would unfairly reach legitimate foreign subsidiaries and risk double taxation.

Advocates emphasized revenue and service impacts. Don Griswold, who said he now works at the Center on Budget and Policy Priorities, described how multinational firms move intangible assets offshore to shift profits and said federal law “claws back 50 of those shifted profits” while Massachusetts currently recovers only 5 percent. “The bill in front of you remedies that by restoring the 50% clawback of GILTI,” Griswold said. Several witnesses, including policy analysts and education and labor groups, cited an estimated $400,000,000 in potential annual revenue for the Commonwealth if the state increases its GILTI inclusion.

Keith Michon, president of the Fall River Educators Association, said his district depends on federal and state funding and warned of the risks of federal cuts: “Our schools receive more than $10,000,000 annually in federal funding,” he said, urging the committee to act so local districts can “sustain this work.” Vicky, an advocate at the Massachusetts Law Reform Institute, noted SNAP’s scale in the state and detailed how Department of Transitional Assistance staffing and accuracy problems could be exacerbated by federal changes; she said “1 in 6 residents use SNAP, spending 2,600,000,000.0 federal dollars a year” and that the program’s caseload rose about 45% since the COVID-19 pandemic.

Several labor and education union leaders framed the measure as a fairness question. Jessica Tang, president of the American Federation of Teachers Massachusetts, and Max Page, president of the Massachusetts Teachers Association, said the state should press multinational corporations to pay a minimum share to protect education and social services. Page asked lawmakers to consider whether it is acceptable to “cut a single person off of health care” while corporations shelter profits.

Business groups urged caution. Kelsey Johnson, vice president of state affairs at the Global Business Alliance, said international companies employ “over 236,000 people at 1,200 companies” in Massachusetts and asked lawmakers to vote no on S.2041, the version that would create a tax-haven list. Alan Pasetsky, a tax attorney and consultant for GBA, said the blacklist would “require affiliates of a Massachusetts company incorporated in countries on this arbitrary list to be included in a Massachusetts tax return regardless of whether they had any connection to Massachusetts,” and warned that could create double taxation and diplomatic disputes.

Other witnesses described a range of policy options adopted or considered by other states, including mandatory worldwide combined reporting and different approaches to conformity with federal rules enacted after the 2017 tax law. Bridal Tipping, who testified on behalf of the Maine Center for Economic Policy, described Maine’s experience with a 50% inclusion of GILTI and said several states have taken similar steps.

No formal committee vote or legislative action occurred during the hearing. Committee chairs and members asked technical questions about how the changes would interact with federal rules, prior Massachusetts law and other states’ approaches, and witnesses acknowledged the final revenue figures and Department of Revenue cost estimates were still pending.

Discussion points

- Supporters: increase GILTI inclusion from 5% to 50% (or higher) to recapture shifted profits and generate revenue estimated in testimony at roughly $400 million annually; protect education, SNAP, and other services.
- Opponents: the S.2041 blacklist approach could reach lawful foreign affiliates, cause double taxation, and harm international companies and jobs in Massachusetts; prefer targeted enforcement tools and existing add-back rules.
- Technical/legal arguments: proponents cited federal GILTI rules and other states’ actions; opponents warned of international tax treaties and practical double-tax risk.

No formal direction or committee decision was recorded during the public testimony.

Ending

Committee members reserved final judgment pending official cost estimates from the Department of Revenue and further technical review. The hearing produced detailed testimony both in favor of recapturing offshore profits to fund state services and in opposition to language some business groups described as overbroad.