2014 Government Regulations & Business Summit
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By Derek Wallbank
By Derek Wallbank
WASHINGTON – U.S. taxpayers would need to pay an average of $1,259 more a year to make up the federal and state taxes lost to corporations and individuals sheltering money in overseas tax havens, according to a report.
“Tax haven abusers benefit from America’s markets, public infrastructure, educated workforce, security and rule of law - all supported in one way or another by tax dollars - but they avoid paying for these benefits,” U.S. Public Interest Research Group said in the report released Tuesday, the deadline for filing 2013 taxes.
“Instead, ordinary taxpayers end up picking up the tab, either in the form of higher taxes, cuts to public spending priorities, or increases to the federal debt,” it said.
In total, the U.S. loses $150 billion in federal revenue and another $34 billion in state revenue annually because of money parked in tax havens, the Boston-based consumer advocacy group concluded.
That’s almost 5 percent of total federal revenue. The U.S. is projected to raise $3.032 trillion this year, up from $2.775 trillion for fiscal year 2013, according to the Congressional Budget Office.
In Rhode Island alone, companies and individuals taking advantage of tax haven cause the federal government to lose $400 million in revenue each year, in addition to $100 million in lost state revenue. Each Rhode Island filer would have to pay $1,000 more a year to make up for the lost revenue, according to the PIRG report.
U.S. PIRG released the report as it tries to increase pressure on lawmakers to change how companies pay taxes on income credited to foreign subsidiaries.
The largest U.S.-based companies have accumulated $1.95 trillion outside the U.S., up 11.8 percent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News.
Together, they added $206 billion to their stockpiles of offshore profits last year, leaving earnings in low-tax countries until Congress gives them a reason not to. Three multinational firms - Microsoft Corp., Apple Inc. and International Business Machines Corp. - added $37.5 billion, or 18.2 percent of the total increase.
Prospects have dimmed for a revision of the U.S. tax code this year that would have addressed offshore havens.
President Barack Obama, House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, and Senate Finance Chairman Ron Wyden, an Oregon Democrat, support lowering the corporate rate and making significant changes to the taxation of foreign income.
No proposals - including a draft plan from Camp to lower the corporate rate to 25 percent and levy a smaller one-time tax on accumulated profits - have been scheduled for a vote.