Offshore Tax Havens Cost Average Maryland Taxpayers $459 a Year

Media Contacts
Jenny Levin

Each Maryland Small Business $2,298, New Study Finds

With tax day approaching, a new study released by Maryland PIRG found that the average Maryland taxpayer in 2011 would have to shoulder an extra $459 tax burden to make up for revenue lost from corporations and wealthy individuals shifting income to offshore tax havens. The report additionally found that to cover the cost of the corporate abuse of tax havens in 2011, small businesses in Maryland would have to foot a bill of over $2,298 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 GAO 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 must pick up the tab,” said Jenny Levin, Maryland PIRG State Advocate. “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.”

Levin was joined by Eva Khoury, the owner of a small business in Hampden called Earth Alley.

“Small businesses provide clear economic benefits to their communities: about 67 percent of every dollar spent at a local business goes back into the local economy, not to mention other support like monetary and in-kind donations to several local non-profits,” said Khoury.

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).

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 Levin.

 

Click here for a copy of “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens.”

Click here to see an earlier study showing 30 companies that paid more in campaign contributions and lobbying expenses than they did in federal income taxes.

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Maryland PIRG, the Maryland Public Interest Research Group, is a non-profit, non-partisan public interest advocacy organization that takes on powerful interests on behalf of its members, working to win concrete results for our health and well-being.