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In just a few days many hard-working people, including small business owners will be lining up at the post office to mail their tax returns before the deadline. Many Americans would be shocked to hear about an invisible tax burden put on them this year by some of the largest, most profitable corporations that use offshore tax havens to avoid paying their full tax bill. This tax dodging costs taxpayers an estimated $100 billion every single year.
According to a report I released on Thursday, Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens (masspirg.org/reports/map/picking-tab), the average Massachusetts tax filer in 2011 would have to shoulder an extra $636 tax burden this year in order to make up for revenue lost from corporations and wealthy individuals shifting income to offshore tax havens.
Small businesses are hit especially hard by corporate tax dodging. To cover the cost of the abuse of tax havens this past year by multinational corporations, owners of small business with less than 100 employees in Massachusetts would have to foot an addition bill of $3,349 to cover the lost revenue. On top of that, responsible small businesses are put at a competitive disadvantage since they can’t hire armies of well-paid lawyers and accountants to use offshore tax loopholes.
Who is responsible for shifting this tax bill onto ordinary taxpayers? At least 83 of the 100 largest publically traded American corporations as well as some individuals, shift profits legitimately made here in the United States to offshore tax havens. They do this so they avoid paying federal income taxes.
The rest of us pick up this tab in the form of higher taxes, cuts to the public programs, or a larger federal debt. These tax dodging schemes — and others like them — allow corporations like G.E. and Wells Fargo to pay far less in federal income taxes than many households didlast year.
In the weeks and months leading up to today, many Americans have spent hours navigating the tax code trying to determine how much they owe this year. In those very same weeks and months, we’ve heard talk in Congress and in the media of deep budget cuts to public priorities, of skyrocketing budget deficits, and complaints about high corporate tax rates. Yet far too little attention has been paid to the fact that many of the largest and most profitable corporations have quietly shifted their tax burden onto us, the taxpaying public.
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