A new report estimates that the total amount of federal tax revenue lost due to use of overseas tax havens adds up to at least $37 billion per year.
Previous estimates combined corporate and individual tax sheltering and ranged from $43 billion to $123 billion per year. The report explores the impact on smaller U.S. businesses when U.S.-based multinational corporations avoid taxes through overseas tax havens
The report coincides with the launch of a petition drive by a group known as Business and Investors Against Tax Haven Abuse, which aims to gather signatures from the business community to urge President Obama and Congress to enact legislation that puts an end to tax havens. The petition launches with 400 initial business signers. The group is backed by Sen. Carl Levin, D-Mich., who has introduced legislation to combat foreign tax havens. The petition is cosponsored by the advocacy groups Business for Shared Prosperity, Wealth for the Common Good, American Sustainable Business Council and Growth & Justice.
The report, Unfair Advantage: The Business Case Against Overseas Tax Havens, shows how when global corporations use tax havens to reduce or eliminate their taxes, it creates an unlevel playing field by shifting the tax responsibilities onto the backs of domestic businesses and individual taxpayers. The report also describes how corporate tax havens support a climate of gaming the system and enable risky investment behavior of the type that led to the recent financial crisis and the worst recession since the Great Depression.
"Small businesses are the lifeblood of local economies. We pay our fair share of taxes, shop locally, support our schools and actually generate most of the new jobs," said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, in a statement. "So why do we have to subsidize the U.S. multinationals that use offshore tax havens to avoid paying taxes? We need to end tax havens and use that revenue to invest in growing our small businesses. That is how we create a healthy economy."
The report lists nine policies that could help level the playing field between small, responsible businesses and global corporations including: block all transfers of intellectual property designed to evade taxes; ban phony offshore corporations that pretend to earn profits offshore when the primary management team remains in the U.S.; repeal the 80/20 rule that allows corporations to escape U.S. taxation if 80 percent of their business occurs overseas; and create disincentives and penalties for U.S. government contractors using tax havens to avoid U.S. taxes.
The report may be found at http://businessagainsttaxhavens.org/reports.
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