You are hereHome >
Offshore Tax Havens Cost Average Illinois Taxpayers $508 a Year, Each Illinois Small Business $2,556, New Study Finds
Chicago – With tax day approaching, a new study released by Illinois PIRG found that the average Illinois taxpayer in 2011 would have to shoulder an extra $508 tax burden make up for revenue lost from corporations and wealthy individuals shifting income to offshore tax havens. The report “Picking up the Tab” also found that to cover the cost of the corporate abuse of tax havens in 2011, small businesses in Illinois would have to foot a bill of $2,556 on average.
Every year, corporations and wealthy individuals avoid paying an estimated $100 billion in taxes by shifting income to low or no tax offshore tax havens. Of that $100 billion, $60 billion in taxes are avoided specifically by corporations. A Government Accountability Office study found that at least 83 of the top 100 publically traded corporations use offshore tax havens.
“When corporations shirk their tax burden by using accounting gimmicks to stash profits legitimately made in the U.S. in offshore tax havens like the Caymans, the rest of us have to pick up the tab,” said Celeste Meiffren, field director with Illinois PIRG. “Responsible small businesses don’t just foot the bill for corporate tax dodging, they are put at a competitive disadvantage since they can’t hire armies of well paid lawyers and accountants to use offshore tax loopholes.”
“We do not take issue with paying our fair share of taxes. It is our duty as citizens, and we know that we reap many benefits from our taxes,” said Mike Nikodem, owner of Great Harvest Bakery, a small business in Naperville. “But when we see that a company like Boeing, with $9.7 billion in profits between 2008-2010, paid an effective tax rate of -1.8%, we know that there is something wrong and totally unfair in the US tax system.”
Using complex tax avoidance schemes, many of America’s largest corporations drastically shrink their tax bill:
- Google uses techniques nicknamed the “double Irish” and the “Dutch sandwich,” involving two Irish subsidiaries and one in Bermuda – a tax haven – that helped shrink its tax bill by $3.1 billion between 2008 and 2010.
- Wells Fargo paid no federal income taxes between 2008 and 2010 despite being profitable all three years in part due to its use of 58 offshore tax haven subsidiaries.
- G.E. received a $3.3 billion tax refund in 2010 despite reporting over $5 billion in U.S. profits to shareholders. The company has $94 billion parked offshore and uses 14 tax haven subsidiaries.
“It is appalling that these companies get out of paying for the nation’s infrastructure, education system, security, and large market that help make them successful,” added Meiffren.
The report recommends closing a number of offshore tax loopholes, many of which are included in the Stop Tax Haven Abuse Act (H.R. 2669) and Cut Unjustified Tax Loopholes Act (S.2075).
“I want to urge my Congresswoman, Representative Biggert and all other Illinois Representatives who have not signed on to this bill, to stand up for me and all the other small business owners across Illinois and co-sponsor the Stop Tax Haven Abuse Act,” said Nikodem.
For a full version of the report, go here: http://illinoispirg.org/reports/ilp/picking-tab
For our earlier study showing 30 companies that paid more in campaign contributions and lobbying expenses than they did in federal income taxes, go here: http://illinoispirg.org/reports/ilp/representation-without-taxation
DEFEND THE CFPB
Tell your representative to oppose the “Financial CHOICE Act,” which would gut Wall Street reforms and destroy the Consumer Financial Protection Bureau as we know it.
Your donation supports Illinois PIRG’s work to stand up for consumers on the issues that matter, especially when powerful interests are blocking progress.