Danny Katz
Executive Director, CoPIRG
Executive Director, CoPIRG
CoPIRG
As hardworking Americans file their taxes today, it’s a good time to be reminded of how ordinary taxpayers pick up the tab for the loopholes in our tax laws. CoPIRG was joined today by Colorado Fair Share to release a new study which revealed that the average Colorado taxpayer in 2013 would have to shoulder an extra $1,361 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 Danny Katz, Director for CoPIRG.
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 Senator Bennet 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 Katz.
The report additionally found that the average Colorado small business would have to pay $3,551 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.
“Our tax dollars pay for the roads and rails corporations ship their goods on, the training for a workforce they employ and the first responders that race to save lives when floods and fires strike our communities,” said Caroline Webster, Field Organizer for Colorado Fair Share. “They benefit because we’re part of a democracy that looks out for each other and works because we all pitch in. If they want to do business here, they need to pay taxes here, not there.”
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).
Colorado can also take measures to reclaim some of the revenue lost to tax havens. CoPIRG found that by passing a simple, proven reform already on the books in other states, Colorado could save $15 million annually.
“The abuse of offshore tax havens undermines public confidence in our tax system. It adds to the deficit, as well as to the tax burden of taxpayers who play by the rules,” said Katz. “We need to ensure that the responsibility of paying for public prioritiesis shared fairly.”
Click here for a copy of “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens.”
Click here to see an earlier study showing how states can crack down on offshore tax dodging.