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CHICAGO, December 6th – With Congress scrambling to agree on ways to reduce the deficit, the Illinois Public Interest Research Group joined with Naperville small business owner Mike Nikodem today to point out a clear first step to avoid the “fiscal cliff”: closing offshore tax loopholes. Many of America’s largest corporations and wealthiest individuals use accounting gimmicks to shift profits made in America to offshore tax havens, where they pay little to no taxes. This tax avoidance costs the federal government $150 billion in tax revenue each year. Illinois PIRG released new data illustrating the size of this loss with 16 dramatic initiatives for which the $150 billion could have paid and also by demonstrating the impact of this amount on the fiscal cliff.
“When corporations skip out on their taxes, the rest of us are left to pick up their tab.” said Anu Dathan, Program Associate for Illinois PIRG. “Right now, this kind of tax dodging is perfectly legal, but it’s not fair and it’s time to put an end to it.”
At least 83 of the top 100 publicly traded corporations in the U.S. make use of tax havens, according to the GAO. American companies like Wal-Mart, Coca Cola, and Pfizer – which benefit from our educated workforce, infrastructure, and security – keep more than 70% of their cash offshore. Thirty of America’s largest, most profitable corporations actually made money off our tax code between 2008 and 2010 by avoiding taxes altogether and by receiving tax rebates from the government. Using offshore tax havens allows corporations and wealthy individuals to shift the tax burden to ordinary Americans, forcing us make up the difference through either cuts to public services, a bigger deficit, or higher taxes for everyday citizens.
Small business owner Mike Nikodem, co-owner of the Great Harvest Bread Bakery in Naperville, pointed out that many of these large corporations have even had job losses in the United States. “Companies like GE are one of many large companies that are not creating any jobs in the US, but are still realizing huge financial benefits from exploiting the tax loopholes our government gives them. Proponents of these tax policies argue the policies are necessary for job creation, but GE is not creating any jobs that help the U.S. economy, and neither are so many companies like them.”
- Providing Pell Grants for ten million college students every year for four years;
- Bringing transportation into the 21st Century by funding construction of 15 commuter rail lines, 50 light rail transit lines and more than 800 bus rapid transit lines
- Providing a tax cut of $1,068 for every person who filed taxes in America.
The group released a fact sheet today entitled “What America Could Do With $150 Billion Lost to Tax Havens" that illustrates 16 such initiatives as items in which we could have invested with that money, but instead let become lost revenue.
Finally, and perhaps most strikingly, Illinois PIRG found reclaiming the $150 billion lost to offshore tax loopholes would more than cover the $109 billion in automatic spending cuts that will take effect in 2013 if Congress fails to avert the “fiscal cliff.” In fact, over ten years this lost revenue would be enough to achieve 37.5% of the $4 trillion debt reduction goal for that period favored by bipartisan leaders in Congress.
“There are some tough budget decisions ahead, but closing the offshore tax loopholes that let large companies shift their tax burden to the rest of us should be an easy one.” Dathan added.
To download the fact sheet, “What America Could Do With $150 Billion Lost to Tax Havens,” click here.
A few ways some 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.
Illinois PIRG, the Illinois Public Interest Research Group, takes on powerful interests on behalf of its members, working to win concrete results for our health and our well-being. www.illinoispirg.org
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