Classifying specific foreign countries or types of foreign countries as "tax havens" for state business tax purposes was a popular issue in state legislatures this year. Our data indicates that 16 bills addressing this topic were introduced in 11 states and the District of Columbia during 2015.
Most of the bills didn't make it very far, with 9 failing to leave the chamber of introduction. The remaining 7 bills saw some further action, with 3 ultimately being enacted: Connecticut HB 7061, Vermont HB 489, and a provision in the District of Columbia budget. The tax haven provision in the DC budget, however, was subsequently repealed.
Interestingly, the three enacted bills each employed a different strategy for addressing the issue. Connecticut HB 7061 defined the characteristics of a “tax haven” and authorized the executive branch to apply the definition to specific jurisdictions. The District of Columbia Budget established a list of “tax haven” jurisdictions. Finally, Vermont HB 489 instructed the Tax Commissioner to study the issue and recommend an appropriate course of action to the legislature (though it should be noted that earlier drafts of the legislation included more specific language, but those sections were removed prior to final passage).
We anticipate tax haven legislation being big in 2016 as well. In the meantime, check out our infographic on the legislation introduced in 2015.