Chris Thomas – Oregon News Service
PORTLAND, Ore. – A new report estimates that $190 billion a year in revenue is lost to offshore tax havens – enough to stop the automatic federal spending cuts threatened for March 1, and then some.
Dan Smith wrote The Hidden Cost of Offshore Tax Havens for U.S. PIRG (Public Interest Research Group). He said the consumer advocacy group estimated the U.S. loses $150 billion a year, and states lose another $40 billion. In Oregon, Smith said, the loss is estimated at $506 million a year.
“It’s not a victimless offense,” Smith said. “The winners are the big banks, pharmaceuticals and high-tech companies. And the losers are small businesses and ordinary taxpayers.”
The report said 40 percent of the money in offshore accounts belongs to wealthy individuals, and 60 percent is corporate money. Smith explained that the “corporate subsidiary” is one type of tax dodge. Products might be created and sold in the U.S., but the profits can magically bounce around the world before ending up in a Caribbean post office box, he said.
“In the Cayman Islands, there is actually a single building, five stories tall, that has nearly 19,000 corporate headquarters registered to it,” Smith said.
The system gives the biggest companies an unfair advantage, Smith added.
“The small business owner doesn’t have 1,000 lawyers in its tax department,” Smith said. “That’s how many General Electric has. And not surprisingly, that company, over a three-year period, paid nothing in federal income taxes.”
Defenders of the practice said the tax havens help firms dodge a high corporate income tax rate, and they warned that the companies might relocate if the loopholes were closed. However, Smith argued, few companies pay the full corporate rate. And, he added, they are unlikely to leave the U.S., because the work is done here and the products are sold here.
The report is available at www.uspirgedfund.org.