News Release

Offshore Tax Havens Cost PA Taxpayers $452 per Year

Each Pennsylvania Small Business $2,528, New Study Finds
For Immediate Release

April 12, PHILADELPHIA – With tax day approaching, a new study released by PennPIRG found that the average Pennsylvania taxpayer in 2011 would have to shoulder an extra $452 tax burden to make up for revenue lost from corporations and wealthy individuals shifting income to offshore tax havens. The report additionally found that to cover the cost of corporate abuse of tax havens in 2011, small businesses in Pennsylvania would have to foot a bill of over $2,528 on average.

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 Alana Miller. “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.”

Alana Miller was joined by Sharon Ward of the Pennsylvania Budget and Policy Center and Anne Gemmell from Fight for Philly.

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) and Cut Unjustified Tax Loopholes Act (S.2075). Congressman Fattah and Brady are cosponsors of the House legislation.

“Plain and simple this bill is about fairness,” said Congressman Fattah. “It’s about playing by the rules and paying ones fair share. Our current tax code [system of taxation] allows corporations to protect their profits by turning a blind eye to offshore tax haven abuses, providing little incentive for voluntary compliance.”

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 profit 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 Miller.

Congressman Fattah concluded, “It should come as no surprise that most people believe the tax system is full of special tax breaks and loopholes that only benefit the wealthiest Americans, while unfairly penalizing working class citizens [taxpayers].”

Go to www.pennpirg.org/reports for a copy of “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens.”

Go to www.pennpirg.org/reports/pap/representation-without-taxation to see an earlier study showing 30 companies that paid more in campaign contributions and lobbying expenses than they did in federal income taxes.

 

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