Tax Dodging By Corporations And The Wealthy Cost the Average U.S. Taxpayer $434 Last Year

Today is Tax Day, the day when federal income tax returns are due. Federal income tax returns are projected to be about 6.2 percent of GDP, which would be the lowest total since 1950.

These low revenue numbers are in large part generated by the economic recession. Widespread joblessness depressed revenues and as the economy rebounds, revenues will start to inch back up. But low revenue is also a consequence of the conservative push to enact ever-lower tax rates on the rich and corporations, along with the growing use of tax havens and tax loopholes that the wealthy and multinational corporations use to minimize or eliminate tax liability altogether.

But tax dodging doesn’t only result in lower revenues: it inflicts a price on those Americans who don’t employ such strategies, through higher taxes now or in the future and through decreased government services. According to a new report by the California Public Interest Research Group (CALPIRG), a $100 billion burden is shifted onto taxpaying Americans by tax avoidance:

The United States loses approximately $100 billion in tax revenues every year due to corporations and individuals sending their money to offshore tax havens…In 2010, making up for this lost revenue cost the average U.S. tax filer $434. That’s enough money to feed a family of four for three weeks.

To get a sense of how widespread this problem is, consider that, according to the Office of Management and Budget, “corporate tax receipts will account for just 7.2% of federal revenues in 2010.” Fifty years ago corporate tax receipts were 23 percent of federal revenue. Several corporations pay literally nothing into the federal treasury. Others, such as Google, drive their effective tax rate all the way down into single digits through the use of tax havens. Wealthy individuals can employ similar tactics to minimize or eliminate their tax bill.

When faced with corporations paying little to nothing in taxes, several conservatives have said that such avoidance means that the corporate tax rate should be cut. Republicans have also proposed cutting the IRS budget, even though every dollar spent on tax enforcement yields $10 in revenue. Either of these policies would further exacerbate the already problematic trend that is pushing more of the responsibility for financing the government onto middle-class Americans.