Picking Up the Tab 2014: Average Citizens and Small Businesses Pay the Price for Offshore Tax Shelters

Source: Tom Van Heeke, Benjamin Davis, Phineas Baxandall, and Dan Smith, U.S. PIRG, April 15, 2014

From the summary:
Every year, corporations and wealthy individuals use complicated gimmicks to shift U.S. earnings to subsidiaries in offshore tax havens – countries with minimal or no taxes – in order to reduce their state and federal income tax liability by billions of dollars. Tax haven abusers benefit from America’s markets, public infrastructure, educated workforce, security and rule of law – all supported in one way or another by tax dollars – but they avoid paying for these benefits. Instead, ordinary taxpayers end up picking up the tab, either in the form of higher taxes, cuts to public spending priorities, or increases to the federal debt.

The United States loses approximately $184 billion in federal and state revenue each year due to corporations and individuals using tax havens to dodge taxes. On average, every filer who fills out a 1040 individual income tax form would need to pay an additional $1,259 in taxes to make up for the revenue lost…

The taxes avoided by multinational corporations make up the majority – $110 billion – of the government revenue lost to offshore tax havens. Every small business would need to pay an average of $3,923 in additional taxes if they were to pick up the full tab for income lost to corporations exploiting tax havens…

Some of America’s biggest companies use tax havens to avoid tax obligations in the United States, including many that have taken advantage of government bailouts or rely on government contracts. In 2012, 82 of the 100 largest publicly traded U.S. corporations booked revenues to offshore tax haven countries…

To restore fairness to the tax system, decision makers should prevent corporations and wealthy individuals from booking their income to offshore tax havens by eliminating the incentives and mechanisms used to shift money overseas…

picking up the tab

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