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AUSTIN– With tax day approaching, a new TexPIRG study, Picking Up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens, found that the average Texas taxpayer in 2011 would have to shoulder an extra $467 tax burden to make up for revenue lost from corporations and wealthy individuals shifting income to offshore tax havens. The report additionally found that the average additional tax burden shouldered by Texas small businesses added up to $2085 due to the “offshoring” of profits by large corporations.
Every year, corporations and wealthy individuals avoid paying an estimated $100 billion in taxes by shifting income to low or no tax offshore tax havens. Of that $100 billion, $60 billion in taxes are avoided specifically by corporations. A GAO study found that at least 83 of the top 100 publically traded corporations use offshore tax havens.
“When corporations shirk their tax burden by using accounting gimmicks to stash profits legitimately made in the U.S. in offshore tax havens like the Caymans, the rest of us must pick up the tab,” said Melissa Cubria, Advocate, Texas Public Interest Research Group (TexPIRG). “Responsible small businesses don’t just foot the bill for corporate tax dodging, they are put at a competitive disadvantage since they can’t hire armies of well paid lawyers and accountants to use offshore tax loopholes.”
The report recommends closing a number of offshore tax loopholes, many of which are included in the Stop Tax Haven Abuse Act (H.R. 2669), sponsored in the House by Congressman Lloyd Doggett (D-Texas) and Cut Unjustified Tax Loopholes Act (S.2075).
“Families and small business unfairly bear a greater burden when offshore tax dodgers game the system,” said Congressman Lloyd Doggett (D-Texas), a senior member of the House Ways and Means and Budget Committees. “We cannot afford the revenue lost to these corporate tax avoidance schemes. The ‘Stop Tax Haven Abuse Act,’ which I authored, offers powerful new tools to combat these abuses and would bring jobs and tax dollars back home.”
Using complex tax avoidance schemes, many 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.
- G.E. received a $3.3 billion tax refund in 2010 despite reporting over $5 billion in U.S. profits to shareholders. The company has $94 billion parked offshore and uses 14 tax haven subsidiaries.
“It is appalling that these companies get out of paying for the nation’s infrastructure, education system, security, and large market that help make them successful,” added Cubria.
Click here for a copy of “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens.”
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