Offshore Tax Havens Robbed States of Nearly $40 Billion in 2011
States across the country lost nearly $40 billion dollars of revenues in 2011 due to offshore tax havens, according to a new report by U.S. PIRG Education Fund. The study reveals that corporations account more than $26 billion of lost revenue, while wealthy individuals are responsible for the rest. The blow to states rests on top of nearly $150 billion of lost annual federal revenue due to corporate loopholes.
In a statement, PIRG said everyday Americans bear the burden when the nation’s wealthiest elites avoid paying their fair share.
Tax haven abusers benefit from our markets, infrastructure, educated workforce, and security, but they pay next to nothing for these benefits. Ultimately, taxpayers must pick up the tab, either in the form of higher taxes, cuts to public spending priorities, or increased national debt.
The study notes that the nearly $40 billion languishing in countries like Belize and Bermuda could foot a year’s worth of education costs for nearly 4 million children. The sum also roughly equaled the total state and local expenditures for firefighting and parks and recreation programs.
California was hit the hardest by offshore accounts, totaling about $7.1 billion in losses. New York came in second with $4.3 billion, followed by New Jersey ($2.8 billion), Illinois ($2.5 billion) and Pennsylvania ($2.1 billion).
So who are the culprits hoarding billions in cash away from states’ struggling economies? Citizens for Tax Justice reports that 290 of the Fortune 500 companies use tax havens to burnish nearly $1.6 trillion in collective 2011 profits, up from $1.1 trillion in 2009. Considering that corporations accounted for 26 billion in lost revenue, the gain from these tax havens are negligible compared their trillions in profits.
Upon the report’s release, some lawmakers noted the absurdity of continuing to allow corporate tax loopholes, especially in the context of the conservative assault on social programs during budget talks.
“So much of the discussion in the recent fiscal cliff negotiations centered on shared sacrifice that in order to address our budget problems, we needed everyone at the table,” Rep. Lloyd Doggett (D-Texas) told the media in a conference call. “Corporations did not contribute a cent to resolving the fiscal cliff.”
While it’s unlikely that our gridlocked Congress will pass any kind of meaningful legislation against tax havens, PIRG says statehouses “should act independently to reduce the impact of offshore tax havens on state budgets.”