If you paid any federal income taxes last year, you paid more than Tesla. Elon Musk’s company, one of the world’s most valuable corporations, paid zero federal income taxes in 2024. And because federal taxable income is the starting point for state income taxes, there’s a good chance Tesla paid the corporate minimum tax — a puny amount — here in Oregon.
There’s not enough information publicly available to know what tricks Tesla pulled to make its tax bill disappear, but it would not be surprising if one of them involved using offshore tax havens. This tactic, employed by many multinational corporations, deprives states of revenue that would help pay for schools, health care, and other essential services.
Fortunately, there is a straightforward way for Oregon to crack down on offshore corporate tax avoidance. It’s a policy known as worldwide combined reporting.
The specific games that corporations play with offshore tax havens vary, but the basic strategy is the same: shift profits from the place they were earned to a location that levies little or no taxes on corporate income.
To illustrate, let’s say Big Pharma Corp has developed a new drug. It sets up a subsidiary in the Cayman Islands, a country with no income tax, and transfers the drug’s patent to the subsidiary. When Big Pharma sells the drug in the United States, it pays royalties to the Cayman Islands subsidiary, thereby shifting the profits abroad, where they won’t be taxed.
Under current law, Oregon taxes a corporation’s share of U.S. profits attributed to Oregon. The profits Oregon gets to tax shrink when a corporation artificially shifts them to a foreign subsidiary.
Worldwide combined reporting takes away the tax savings from shifting corporate income offshore. It does so by treating a corporation and all its subsidiaries, in the U.S. and abroad, as one entity for tax purposes.
Under worldwide combined reporting, Oregon would tax the share of a multinational corporation’s global profits equal to the share of that corporation’s sales in the state. For example, if Oregon accounts for 5% of a multinational corporation’s global sales, Oregon would levy its corporate income tax on 5% of the company’s global profits.
If worldwide combined reporting were the law in Oregon right now, the state would collect about $116 million more in corporate income taxes in 2025, according to a recent study by the Institute on Taxation and Economic Policy.
Worldwide combined reporting is not a new idea. It used to be the way Oregon and other states taxed corporations until 1984, when a coordinated push by multinational corporations pressured states to rescind the policy.
Today, some states — Oregon included — are discussing reinstating worldwide combined reporting. In the past couple of years, legislative chambers in Maryland and Minnesota approved the policy, though the efforts died in the other chamber.
In the current Oregon legislative session, Senate Bill 419 would adopt worldwide combined reporting. The revenue raised would fund programs to support the health and well-being of parents and young children.
Without a doubt, Oregon would be much better off seeing children get a healthy start in life than seeing multinational corporations artificially shrink their tax bills, a move that further enriches the super-rich. It’s time for Oregon to restore worldwide combined reporting.
Juan Carlos Ordóñez is the Communications Director for the Oregon Center for Public Policy (ocpp.org).
