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With tax day approaching, a new study released by RIPIRG found that in 2011, the average Rhode Island taxpayer would have to shoulder an extra $532 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 the corporate abuse of tax havens in 2011, small businesses in Rhode Island would have to foot a bill of $2,766 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 Ryan Pierannunzi, an associate with RIPIRG. “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.”
Pierannunzi was joined by Congressman David Cicilline and Jeanne Budnick, the co-owner of Pepin Lumber in Woonsocket.
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). Representatives Jim Langevin and David Cicilline are both cosponsors of the Stop Tax Haven Abuse Act, and Senator Sheldon Whitehouse is a cosponsor of the Cut Unjustified Tax Loopholes Act.
“Offshore tax havens enable wealthy special interests to avoid contributing their fair share in taxes and unfairly burden our small businesses, innovators, and entrepreneurs,” said Cicilline. “I thank USPIRG and their Rhode Island affiliate for completing this report and I look forward to working with them as we continue fighting for fair and equitable tax reform.”
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 Pierannunzi.
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 30 companies that paid more in campaign contributions and lobbying expenses than they did in federal income taxes.
The CUT Loopholes Act would put an end to the price and profit shifting that allows publicly traded companies to engage in pervasive tax avoidance.
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