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Verizon Wireless Taxes Vanish in Bermuda Triangle
Like a ship lost in the Bermuda Triangle, about $31 million in taxes due Massachusetts towns and cities from Verizon Wireless in 2005 has vanished from the face of the earth. It happened because Verizon Wireless registered its Massachusetts subsidiary as a corporation based in Bermuda, avoiding its responsibility as a corporate citizen.
On June 21, Steve Early, administrative assistant to District 1 Vice President Chris Shelton, testified before the state's joint Senate and House Committee on Revenue, in support of efforts by Boston Mayor Thomas Menino to close a nearly 100-year-old tax loophole being exploited by Verizon Wireless and other telecom companies.
Under the old law, real estate assessments for telecom companies are reduced if their in-state assets are owned by an out-of-state corporation. While Verizon, MCI, AT&T and Sprint have also exploited the loophole, Verizon Wireless is by far the biggest offender. For the 2003-2004 tax year, the Boston Globe reported, Verizon Wireless succeeded in lowering its assessable real property by 99.7 percent, reducing its tax burden to less than $10,000 annually.
Menino introduced House Bill 2408, An Act Relative to the Taxation of Telecommunications Companies, to close the loophole.
"The telecom companies will try to tell you that if this legislation is passed, they will be forced to pass the increases on to their customers," Menino said. "Well, the telecom companies saved $31 million in FY'05 because of this loophole. Did customers see their bills go down? No."
Early was joined at the hearing by about 20 members of Jobs with Justice and a community group, Neighbor to Neighbor.
"Before Verizon Wireless shifted legal ownership of assets in Massachusetts to a Bermuda-based corporation, it was paying $3 million a year to the city of Boston. The company's annual tax bill now is $9,307," Early said.
Several other Massachusetts mayors also turned out to support the legislation - the loophole has shifted a significant tax burden to other businesses and community residents.
Industry lobbyists maintain that raising telecom property assessments would result in companies having to pass on their costs to customers.
"Let's put VZW's 'ability to pay' vs. ours in a larger perspective," Early said. "The company's total revenues were $27.7 billion last year. Its net profit increased from $3.1 billion in 2003 to $4.7 billion in 2004. Verizon Wireless has a profit margin of 17 percent."
Verizon Wireless has 197 subsidiaries in the United States," Early said. "Only one is incorporated outside the country - Bell Atlantic Mobile of Massachusetts Corp., Ltd., which is based in sunny, tax-dodging Bermuda."
On June 21, Steve Early, administrative assistant to District 1 Vice President Chris Shelton, testified before the state's joint Senate and House Committee on Revenue, in support of efforts by Boston Mayor Thomas Menino to close a nearly 100-year-old tax loophole being exploited by Verizon Wireless and other telecom companies.
Under the old law, real estate assessments for telecom companies are reduced if their in-state assets are owned by an out-of-state corporation. While Verizon, MCI, AT&T and Sprint have also exploited the loophole, Verizon Wireless is by far the biggest offender. For the 2003-2004 tax year, the Boston Globe reported, Verizon Wireless succeeded in lowering its assessable real property by 99.7 percent, reducing its tax burden to less than $10,000 annually.
Menino introduced House Bill 2408, An Act Relative to the Taxation of Telecommunications Companies, to close the loophole.
"The telecom companies will try to tell you that if this legislation is passed, they will be forced to pass the increases on to their customers," Menino said. "Well, the telecom companies saved $31 million in FY'05 because of this loophole. Did customers see their bills go down? No."
Early was joined at the hearing by about 20 members of Jobs with Justice and a community group, Neighbor to Neighbor.
"Before Verizon Wireless shifted legal ownership of assets in Massachusetts to a Bermuda-based corporation, it was paying $3 million a year to the city of Boston. The company's annual tax bill now is $9,307," Early said.
Several other Massachusetts mayors also turned out to support the legislation - the loophole has shifted a significant tax burden to other businesses and community residents.
Industry lobbyists maintain that raising telecom property assessments would result in companies having to pass on their costs to customers.
"Let's put VZW's 'ability to pay' vs. ours in a larger perspective," Early said. "The company's total revenues were $27.7 billion last year. Its net profit increased from $3.1 billion in 2003 to $4.7 billion in 2004. Verizon Wireless has a profit margin of 17 percent."
Verizon Wireless has 197 subsidiaries in the United States," Early said. "Only one is incorporated outside the country - Bell Atlantic Mobile of Massachusetts Corp., Ltd., which is based in sunny, tax-dodging Bermuda."