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With the heightened attention paid to Mitt Romney’s use of offshore tax havens, it is important to remember that tax havens are more than just an electoral issue. Tax havens are a serious policy matter that profoundly affects ordinary Americans, our economy, our national debt and our long-term competitiveness. Some facts to remember:
• Tax havens cost taxpayers an estimated $100 billion a year according to the Senate Permanent Subcommittee on Investigations. For comparison, this amount represents more than seven times the entire state budget of Iowa, New Hampshire and South Carolina combined.
• Abuse of tax havens forces individual taxpayers and small businesses to pick up the tab. A MASSPIRG study last year showed that the amount shouldered by each Massachusetts tax filer averages to about $608 last year. (Source)
• The actual tax rate paid by individuals or companies that use tax havens may in fact be much lower than reported. Due to lack of strong disclosure laws, tax havens can effectively hide income in ways which may be completely legal.
• The more U.S. business profits depend on tax havens, the less companies compete based on their efficiency or innovation with goods and services. America cannot rebuild its economy around competitive tax avoidance.
• Use of offshore tax havens is a national security issue because shadow funds can finance terrorism and organized crime. This is one reason why numerous law enforcement organizations support greater disclosure of tax haven information.
• Due to the size of the U.S. economy, the American government has a unique ability to stop abuse of offshore tax havens. No significant financial player can afford to disobey U.S. financial laws if non-compliance might interrupt their ability to transact with U.S. banks and markets.
Just this week, MASSPIRG and Citizens for Tax Justice released a study highlighting how thirty Fortune 500 corporations pay more on lobbying than they do on federal income taxes – and that at least 22 of those companies use subsidiaries in offshore tax havens. See the study here.
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