Offshore tax dodging costs United States $150 billion annually — groups illustrate impact with 16 dramatic ways lost revenue could be used.
Boston, MA–(ENEWSPF)–December 7, 2012. With Congress scrambling to agree on ways to reduce the deficit, MASSPIRG joined with business, legislative, and community leaders today to point out a clear first step to avoid the “fiscal cliff”: closing offshore tax loopholes. Many of America’s largest corporations and wealthiest individuals use accounting gimmicks to shift profits made in America to offshore tax havens, where they pay little to no taxes. This tax avoidance costs the federal government $150 billion in tax revenue each year. MASSPIRG released new data illustrating the size of this loss with 16 dramatic ways $150 billion could be spent. [DOWNLOAD FACT SHEET.]
“When corporations skip out on their taxes, the rest of us are left to pick up their tab.” said Deirdre Cummings, Legislative Director for MASSPIRG. “Right now, this kind of tax dodging is perfectly legal, but it’s not fair and it’s time to put an end to it.”
At least 83 of the top 100 publically traded corporations in the U.S. make use of tax havens, according to the GAO. American companies like Wal-Mart, Coca Cola, and Pfizer – which benefit from our educated workforce, infrastructure, courts and security – keep more than 70% of their cash offshore. Thirty of America’s largest, most profitable corporations actually made money off our tax code between 2008 and 2010 by avoiding taxes altogether and receiving tax rebates from the government. By using offshore tax havens, corporations and wealthy individuals shift the tax burden to ordinary Americans, forcing us make up the difference through cuts to public services, a bigger deficit, or higher taxes for everyday citizens.
“Offshore tax havens were not created to benefit average American companies. They were created to allow multinational corporations to hide otherwise taxable income from showing up on tax returns. For those of us small business owners who report honestly and pay our fair share of taxes, these loopholes are a disgrace,” said Dean Cycon, Founder and CEO of Dean’s Beans Organic Coffee, in Orange, MA. “We could back away from the cliff easily if these special interest tax dodges were eliminated.”
To illustrate the size of the revenue lost each year to tax havens, MASSPIRG presented 16 specific ways it could be spent, in a fact sheet released today, titled “What America Could Do With $150 Billion Lost to Tax Havens,” Examples include:
- Provide Pell Grants for ten million college students every year for four years;
- Bring transportation into the 21st Century by funding construction of 15 commuter rail lines, 50 light rail transit lines and more than 800 bus rapid transit lines.
- Provide a tax cut of $1,068 for every person who filed taxes in America
“It is appalling that Congress is considering cuts to retirement security, student aid and basic services when today they could shut down billions of dollars in off-shore tax dodging,” said Chuck Collins, Institute for Policy Studies, member of the FACT Coalition, the Financial Accountability and Corporate Transparency Campaign.
Perhaps most strikingly, reclaiming the $150 billion lost to offshore tax loopholes would more than cover the $109 billion in automatic spending cuts that will take effect in 2013 if Congress fails to avert the “fiscal cliff.” In fact, over ten years this lost revenue would be enough to achieve 37.5% of the $4 trillion debt reduction goal for that period favored by bipartisan leaders in Congress.
“In Massachusetts, we have been working on identifying and analyzing similar tax avoidance practices through the Tax Expenditure Commission. With the fiscal cliff looming, tax havens should immediately be off the table as one of the initial steps in righting our economy”, said Jay Kaufman, (D-Lexington), House Chair of the Massachusetts Legislature’s Joint Committee on Revenue.
A Few Ways some of America’s largest corporations drastically shrink their tax bill:
- Google uses techniques nicknamed the “double Irish” and the “Dutch sandwich,” involving two Irish subsidiaries and one in Bermuda – a tax haven – that helped shrink its tax bill by $3.1 billion between 2008 and 2010.
- Wells Fargo paid no federal income taxes between 2008 and 2010 despite being profitable all three years in part due to its use of 58 offshore tax haven subsidiaries.
- Microsoft avoided $4.5 billion infederal income taxes over three years using sophisticated accounting tricks to artificially shift its income to tax-friendly Puerto Rico. The American company pays its Puerto Rican subsidiary 47% of the revenue generated from selling products in America that were developed in America.
“There are some tough budget decisions ahead, but closing the offshore tax loopholes that let large companies shift their tax burden to the rest of us should be an easy one,” Cummings concluded.
To download the fact sheet, “What America Could Do With $150 Billion Lost to Tax Havens,” click here: http://www.masspirg.org/sites/pirg/files/USPTaxHavens%20Cost%20%24150%20billion.pdf
MASSPIRG is a statewide, nonprofit, non-partisan member supported public interest organization
FACT Coalition, Financial Accountability and Corporate Transparency Campaign
Institute for Policy Studies, strengthens social movements with independent research, visionary thinking, and links to the grassroots, scholars, and elected officials. We empower people to build healthy and democratic societies in communities, the U.S., and the world.
Source: http://www.ips-dc.org
