The average individual taxpayer would have needed to shoulder an estimated $1,026 last year to make up for the revenue lost to the offshore tax havens used by corporations and the wealthy, while small businesses would have to pay an extra $3,067 to cover the cost of offshore tax breaks used by large corporations, according to a new study.

The study, by the U.S. Public Interest Research Group, estimated that every year, corporations and wealthy individuals avoid paying an estimated $150 billion in taxes by using complicated accounting strategies to shift their profits to offshore tax havens. Of that $150 billion, $90 billion is avoided by corporations.

“As this timely report shows, tax haven abuse takes an immense toll on the vast majority of American taxpayers who don’t employ armies of lawyers and accountants to avoid paying the taxes they owe," said Sen. Carl Levin, D-Mich., who has introduced several pieces of legislation in Congress to curb the abuse of offshore tax breaks. “We can no longer afford the damage these abuses do to the federal budget, and American families and businesses can’t afford to carry the burden of a privileged few who use egregious loopholes to avoid paying taxes. It is time to close these loopholes, reduce the deficit, protect important investments in our future and bring some fairness back to the tax code.”

The federal revenue lost to offshore tax havens would be more than enough to cover the automatic federal budget cuts caused by the sequester, according to U.S. PIRG. A recent report by the group also found that offshore tax dodging costs states nearly $40 billion annually, which roughly equals the total amount spent by all state and local governments on firefighters in 2008 (see States Lost $40 Billion in Tax Revenue from Offshore Profit Shifting).

Among the examples cited in the report, drug manufacturer Pfizer made 40 percent of its sales in the U.S. over the past five years, but by using offshore tax breaks, the company reported no taxable income in the U.S. during that time. The company operates 172 subsidiaries in tax havens and has $73 billion parked offshore which remains untaxed by the U.S., according to its own SEC filing. That is the second highest amount of money sitting offshore for a U.S. multinational corporation.

Microsoft avoided $4.5 billion in federal income taxes over a three year period by using sophisticated accounting strategies to shift its income to tax-friendly Puerto Rico. Microsoft maintains five tax haven subsidiaries and keeps 70 percent of its cash offshore, a total of $60.8 billion, on which it would otherwise owe $19.4 billion in U.S. taxes.

Citigroup, whose bank was bailed out by taxpayers during the financial meltdown of 2008, maintains 20 subsidiaries in tax havens and has $42.6 billion sitting offshore, on which it would otherwise owe $11.5 billion in taxes, according to its own SEC filing. Citigroup currently ranks eighth among U.S. multinationals for having the most money stashed offshore.

“Tax dodging is not a victimless offense,” said U.S. PIRG tax and budget advocate Dan Smith, who co-authored the report. “When companies use accounting gimmicks to move their profits to tax haven shell companies, the rest of us have to pick up the tab. With the nation facing such serious budget challenges, it’s a no-brainer that we need to close these loopholes and stop letting large corporations avoid paying what they should.”

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