Report Says Closing Tax Loopholes can Solve Fiscal Cliff
Monday, December 17, 2012
With Congress scrambling to agree on ways to reduce the deficit, the Rhode Island Public Interest Research Group (RIPIRG) is saying that closing offshore tax loopholes may be the first step to avoiding go over the so-called fiscal cliff.
According to a report released earlier this month, RIPIRG claims many of America’s largest corporations and wealthiest individuals use “accounting gimmicks” to shift profits made in America to offshore tax havens, where they pay little to no taxes. This tax avoidance costs the federal government $150 billion in tax revenue each year.
“When corporations skip out on their taxes, the rest of us are left to pick up their tab,” said Ryan Pierannunzi, Tax and Budget Associate with RIPIRG. “Right now, this kind of tax dodging is perfectly legal, but it’s not fair and it’s time to put an end to it.”
At least 83 of the top 100 publicly traded corporations in the U.S. make use of tax havens, according to the GAO. American companies like Wal-Mart, Coca Cola, and Pfizer – which benefit from our educated workforce, infrastructure, and security – keep more than 70% of their cash offshore. Thirty of America’s largest, most profitable corporations actually made money off our tax code between 2008 and 2010 by avoiding taxes altogether and receiving tax rebates from the government. By using offshore tax havens, corporations and wealthy individuals shift the tax burden to ordinary Americans, forcing us make up the difference through cuts to public services, a bigger deficit, or higher taxes for everyday citizens.
RIPIRG’s report offers 16 ways the money recovered from closing the tax loopholes could be spent, in a fact sheet released today, titled “What America Could Do With $150 Billion Lost to Tax Havens.” Examples include:
- Provide Pell Grants for ten million college students every year for four years;
- Bring transportation into the 21st Century by funding construction of 15 commuter rail lines, 50 light rail transit lines and more than 800 bus rapid transit lines.
- Provide a tax cut of $1,068 for every person who filed taxes in America
And of course, there’s the fiscal cliff. According to the report, reclaiming the $150 billion lost to offshore tax loopholes would more than cover the $109 billion in automatic spending cuts that will take effect in 2013 if Congress fails to avert the “fiscal cliff.” In fact, over ten years this lost revenue would be enough to achieve 37.5% of the $4 trillion debt reduction goal for that period favored by bipartisan leaders in Congress.
“There are some tough budget decisions ahead, but closing the offshore tax loopholes that let large companies shift their tax burden to the rest of us should be an easy one,” Pierannunzi said.