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Tax Dodging by Corporations and the Wealthy Cost Each Taxpayer $1,026 in 2012

Travis Waldron
Think Progress / News Report
Published: Friday 5 April 2013
As corporate tax reform becomes a hot topic in Washington, D.C., corporations are pushing for reforms that would make it even easier to offshore profits.
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America’s largest corporations have stashed nearly $1.5 trillion in offshore tax havens like Bermuda, the Cayman Islands, and Ireland — countries where they do little business but claim massive profits due to low tax rates. As a result, corporate tax rates fell to a 40-year low in 2011 even as profits rose to a 60-year high.

Tax avoidance from corporations and wealthy individuals has a cost for individual taxpayers and small businesses, according to a new report from the U.S. Public Interest Research Group. According to U.S. PIRG, tax dodging cost individual taxpayers $1,026 and each small business $3,067 in 2012.

Those costs don’t necessarily come from higher taxes; instead, they often come in the form of higher budget deficits or, as they are now, from substantial cuts to public programs and services that benefit middle- and low-income families. “This is a real loss and it’s putting great pressure on the budget and all kinds of investments and programs that the federal government needs to continue to fund,” Michigan Sen. Carl Levin (D) said on a conference call unveiling the report today. Levin has authored legislation calling for the closure of tax loopholes that incentivize the offshoring of profits. “It’s time to close the loopholes, reduce the deficit to protect these important investments in our future, and to bring some fairness back to the tax code,” Levin said.

As corporate tax reform becomes a hot topic in Washington, however, corporations are pushing for reforms that would make it even easier to offshore profits. A “territorial” system, desired by corporations and corporate lobbying groups, would exempt most foreign profits from American taxation and allow corporations to return profits to the U.S. without taxing them. But Dan Smith, the tax and budget director at U.S. PIRG and co-author of the report, said such a system would only make corporate tax dodging worse.“A territorial system is essentially the worst of all worlds and would amount to tax dodging made easy. So if the loopholes we have in our current tax code allow companies to shift money offshore, a territorial tax system would be an open invitation to continue to do that,” Smith said on the call. “It would blow a hole in the federal budget and continue to give multinational corporations a huge advantage over small businesses here in America and also larger domestic businesses that don’t use these loopholes.”

Other studies have shown that a territorial system, a reform supported by the House GOP’s top tax-writer, would lead to the creation of 800,000 overseas jobs. In addition, it would only raise the costs of corporate tax avoidance for both individuals and small businesses.

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ABOUT Travis Waldron

Travis Waldron is a reporter/blogger for at the Center for American Progress Action Fund. Travis grew up in Louisville, Kentucky, and holds a BA in journalism and political science from the University of Kentucky. Before coming to ThinkProgress, he worked as a press aide at the Health Information Center and as a staffer on Kentucky Attorney General Jack Conway’s 2010 Senate campaign. He also interned at National Journal’s Hotline and was a sports writer and political columnist at the Kentucky Kernel, the University of Kentucky’s daily student newspaper.

OhPlease3333's picture

Maybe it will feel better if

Maybe it will feel better if we remember that this would be more correctly stated to say that it cost the AVERAGE tax payer $1026. Those who pay no taxes already due to not being employed or not earning enough to be subject to taxes, they didn't have to pay more. Someone earning $60K paid $1000 more. Someone like Oprah had to pay $100,000K more. But her tax bracket is also parking funds offshore, so it comes close to evening out for them.
Or, as the article alludes, it would be more correct to say that this action is costing no one money....yet. It is causing the federal government to borrow more. But, this is a tiny, tiny fraction of what the government borrows. It is hard to make a case that this is an awful thing - making the government borrow funds - if we are not equally outraged by other factors leading to deficit spending.
Or, as the article also alludes, it is more correctly stated that the action is causing the government to cut back services. And maybe it is cutting back and borrowing more. But if we can't afford the commitments we as a country have already made, perhaps we do need to cut back, even if those cuts are painful and unpopular. We don't seem to be doing a good job convincing a lot of high tax bracket taxpayers that paying their taxes is a good way to invest their funds. They don't seem to feel like they are getting a good return on them. I think if we are pro-government spending, we need to ask ourselves what we could be doing better to convince them, rather than to force them.

OHPLEASE3333: the point of

OHPLEASE3333: the point of the article is if these corporations who horde trillions off shore actually paid taxes on them, the services apologists like you claim we can't afford would be fully paid for and within budget because there would be more people able to pay taxes: The education and parental help systems most of "the greatest generation" used as bootstraps for their boomer kids would still exist today. (in the past decade alone funding to state colleges has reduced 21% per pupil, and clinton's republican congress killed childcare grants dead)

Funny how social security worked fine for 70 years, and was fine even after wwII when the national debt to gdp ratio was higher than it is now. Funny how that national debt was wiped out by 1955 while at the same time we gave free college and medical to every wwII vet (which basically meant everyone 19 or over). Funny how the expansion of federal research and pell grants during this time led to every factory worker's child getting an education affordable on a part time job.

Our tax revenue to per-capita gdp in this country is the lowest it's been since the turn of the 20th century (you know, the age of no indoor plumbing robber barrons and people shot on sight for daring to ask for a weekend?). We have a bunch of people like you who prefer to buy the lies of the corrupt politicians and their paymasters, the lie that this is inevitable, the lie that the government cannot responsibly dispense services, and above all the lie that the government cannot prevent abusive international conglomerates from sucking our nation dry. Libertarian brainwash-ees would rather roll over and allow these fully un-accountable organizations to fill the power vacuum rather than get off their duff , hold politicians accountable for not serving this country, and elect people who promise to go to any lengths necessary to restore american economic independence.

America went from british-dependent colony to superpower in a few generations on hamiltonian economics. America went from superpower to banana republic in 40 years under friedmanite-reaganite economics.

So, which is it going to be, hold politicians accountable until they serve us, or let these multinationals complete their pillaging of this country and the reduction of the first world to third.

Inner city schools and public safety, for instance, would be perfectly fine if the public had stood up and said "no, we will not allow you to pay zero taxes on your hundred story high-rise, you do business here and you WILL give back to the community for that privilege, and any politician that votes for this regardless of party will be tossed by the neck"

For the record, the importance of getting america off of FTA's cannot be overstated. I'd hold my nose against some pretty politically repulsive platforms to vote for someone who would stand against this bi-partisan reduction of the middle class.

As each day passes, it

As each day passes, it becomes more and more obvious to me (and I ain't all that brilliant) that corporations no longer feel any sense of loyalty to the countries in which they do business. Maybe that is what is meant by "international" - the perceived right to function outside the laws of any particular country.

Do these corporations, then, simply float above the fray in which the rest of us are required to live? Do they draw sustenance from the rest of us through the use of our labor and the infrastructures in which they operate without a thought of giving back through decent wages and taxes to support that infrastructure?

On top of that, we break our own backs when we spend our money on their products - often crappy stuff that we really, as a society, do not NEED. We continue to mindlessly subsidize their wealth through impoverishing ourselves.

Kind of makes one wonder about the level of intelligence in this country.

The filthy rich

The filthy rich ultraconservative billionaires, millionaires, and Fortune 500 corporation have convinced their right-wing, factually-challenged, TRUTH-disdaining, programmable idiot base in the Party of Stupid that it's the poor who are getting food stamps and Social Security who are destroying the country.


You NAILED it Jeffrey!!!!!!!!!

OhPlease3333's picture

@JeffreyHill, while being a

@JeffreyHill, while being a millionaire is more comfortable than having net worth of less than one million dollars, being a millionaire means very very little in the US in 2013. That is not a level of comfort where the individual can provide for their own basic needs without working. Honestly. You can stop despising millionaires so much. Most of them go to work every day and stress about finances just like everyone else.

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