Chris Esh
WashPIRG
SEATTLE – As hardworking Americans breathe a sigh of relief getting their taxes in, it’s a good time to be reminded of how ordinary taxpayers pick up the tab for the loopholes in our tax laws. WashPIRG was joined today by Gerald Hankerson, Director of Washington’s Main Street Alliance, and Theo Martin, owner of Island Soul Restaurant, to release a new study which revealed that the average Washington taxpayer in 2013 would have to shoulder an extra $1,172 in taxes to make up for the revenue lost due to the use of offshore tax havens by corporations and wealthy individuals.
“Average taxpayers and small business owners foot the bill for offshore tax dodging. Every dollar in taxes companies avoid by booking profits to shell companies in tax havens must be balanced by cuts to public programs, higher taxes for the rest of us, or more debt,” said Chris Esh, WashPIRG Program Associate.
Every year, corporations and wealthy individuals avoid paying an estimated $184 billion in state and federal income taxes by using complicated accounting tricks to shift their profits to offshore tax havens. Of that $184 billion, $110 billion is avoided specifically by corporations.
In early April, the Senate Finance Committee voted to renew two especially egregious offshore loopholes which will cost $8 billion in lost revenue over the next two years.
“The Senate Finance Committee, where our own Sen. Cantwell serves, squandered an opportunity to stand with regular taxpayers who can’t marshal armies of lawyers and lobbyists to bend the tax code to their whim. Unfortunately, they caved to special interest pressure,” said Esh.
The report additionally found that the average Washington small business would have to pay $4,166 to cover the cost of offshore tax dodging by large corporations. Offshore tax havens give large multinationals a competitive advantage over responsible small businesses which don’t have subsidiaries in tax havens to reduce their tax bills. Small businesses get stuck footing the bill for corporate tax dodging.
“People may disagree on the level of taxation or tax policy issues, but we should all be able to agree that businesses should compete on the quality of the products and services they offer, not on the cleverness of their tax attorneys,” said Theo Martin, owner of Island Soul Restaurant in Seattle’s Columbia City neighborhood. “Closing these loopholes levels is necessary if we expect to have a level playing field for small businesses.”
Many of America’s largest and best-known corporations use these complex tax avoidance schemes to shift their profits offshore and drastically shrink their tax bill. GE, Microsoft, and Pfizer boast the largest offshore cash hoards:
The report recommends closing a number of offshore tax loopholes. Many of these reforms are included in the Stop Tax Haven Abuse Act, introduced by Sen. Levin in the Senate (S.1533) and Rep. Doggett in the House (H.R. 1554).
You can find the report “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens,” here.
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WashPIRG, the Washington State Public Interest Research Group, is a non-profit, non-partisan public interest advocacy organization that takes on powerful interests on behalf of its members, working to win concrete results for our health and well-being.