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By PBN Staff
(Updated, 4:32 p.m.)
PROVIDENCE – Rhode Island lost $229 million in tax revenue due to the use of offshore havens in 2012, according to a report released Tuesday by the R.I. Public Interest Research Group, placing it at No. 32 among the 50 states and the District of Columbia.
The report, “The Hidden Costs of Offshore Tax Havens,” said that the $229 million would have been enough to pay the salaries of more than 3,700 teachers, or cover Rhode Island College’s in-state tuition for more than 30,000 students.
“Tax dodging is not a victimless offense. When corporations skirt taxes, the public is stuck with the tab. And since offshore tax dodgers avoid both state and federal taxes, they hurt everyday taxpayers twice,” Ryan Pierannunzi, tax and budget associate for RIPIRG, said in prepared remarks. “Rhode Island should be using that money to benefit the public.”
According to the report, state taxpayers across the United States lost nearly $40 billion in 2012 from offshore tax loopholes. This is enough money, according to the report, to cover the educational costs for 3.7 million children for one full year.
The report showed Massachusetts at No. 7 on the list, with companies and individuals using offshore havens to deprive the state of $1.7 billion in potential tax revenue. Connecticut was listed at No. 13 on the list, with $904 million in potential lost revenue.
In Rhode Island, tax havens were used by both wealthy individuals as well as corporations, which saved $164 million and $65 million on their state tax bills, respectively.
“As we work to get our country back on the right track, it is critical that we get corporations and wealthy individuals to pay their fair share in taxes,” U.S. Rep. David N. Cicilline said in prepared remarks.
The report cited 2008 statistics from the Government Accountability Office that said that at least 83 of the top 100 publicly traded corporations in the U.S. used tax havens. At the end of 2011, 290 of the top Fortune 500 companies reported to holding a collective $1.6 trillion offshore.
“By using offshore tax havens, corporations and wealthy individuals shift the tax burden to ordinary Americans, forcing us to make up the difference through cutting public services, growing our already big deficit or raising taxes on everyday citizens,” said the report.
The report strongly recommended that states not wait for federal action to change laws and regulations that allow for the significant use of offshore tax havens and went on to propose potential policy solutions, including: decoupling state tax systems from the federal tax system; requiring worldwide combined reporting for multinational corporations; requiring increased disclosure of financial information; and withholding state taxes as part of federal Foreign Account Tax Compliance Act withholding.
“Some budget decisions are tough, but closing the offshore tax loopholes that let large companies shift their tax burden to the rest of us is a no-brainer,” said Pierannunzi.
To view the full report, visit: http://ripirgedfund.org/sites/pirg/files/reports/The%20Hidden%20Cost%20of%20Offshore%20Tax%20Havens%20RIPIRG%20Education%20Fund.pdf