The Hill: Report: Taxpayers shoulder burden for offshore tax haven use

By Bernie Becker
The Hill, April 4, 2013

... U.S. PIRG’s report found that the Treasury collects around $150 billion less a year than it could because of tax havens – with around $90 billion of that potential revenue coming from multinational corporations. Individual taxpayers account for the other roughly $60 billion. To make up for that $150 billion in revenue, PIRG found that the average U.S. taxpayer would need to cough up an extra $1,026. The average small business, meanwhile, would need to pay an additional $3,067 to make up for the $90 billion that corporations could be paying.

Sen. Carl Levin (D-Mich.), a longtime critic of offshore tax strategies, told a Thursday conference call that the current debate over how to reduce deficits amplified the need to take action against the use of tax havens. Levin, the chairman of a permanent Senate subcommittee on investigations, released a report last year that found that Microsoft and HP both used offshore strategies that allowed them to avoid billions of dollars in taxes. ...

The PIRG report stresses that the offshore tax strategies are often perfectly legal, especially when it comes to corporations. Under current law, multinationals owe taxes on profits made anywhere in the world, but don’t have to pay until profits are brought to the U.S. and get credits for taxes paid to foreign governments. Because of that, many Republicans and business groups want to permanently shield profits U.S. companies make abroad by shifting to a so-called territorial system. ...

But on Thursday’s conference call, Dan Smith of PIRG and Scott Klinger of Business for Shared Prosperity both said that a territorial system would simply give companies more incentive to shift profits offshore. Levin’s report last year, for instance, found that Microsoft transferred intellectual property rights offshore, saving $4.5 billion in the process. ...

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