Billions in Tax Revenue Stays in State, Thanks to Squire Sanders
Because of provisions in a limited number of its bonds, the state of Connecticut faced having to exempt interest on federal bonds from
Connecticut’s corporate franchise tax, resulting in the loss of billions of dollars of state tax revenue. We solved the problem by using the state’s power of eminent domain to eliminate the problematic bond covenant, preventing massive revenue loss. Acting on our advice,
Connecticut was the first state to authorize the use of the eminent domain power to eliminate bond covenants that impose burdens on the public issuer of the bonds.