In fact, the use of offshore tax havens by corporations costs the government $60 billion annually. Such tax dodging gives multinational corporations a leg up on smaller firms that can’t avoid their tax bills, whether its through higher taxes or fewer services. According to a new report from U.S. PIRG, the cost of corporate tax havens amounts to $2,116 for every small business in America:
Instead of competing on a level playing field, small businesses and those without offshore tax havens must pick up the extra tax tab and compete against the artificially lower costs of multinational companies using tax havens.
To illustrate that burden, this paper looks at how much more the average small business tax bill would need to be to cover the $60 billion in federal revenues estimated lost each year from multinational corporations using offshore tax havens. We define a small business as one with less than 100 employees, using Census Bureau data on the number of such businesses. Based on the number of small businesses in the United States, each would need to pay an additional $2,116 in taxes to shoulder this burden.
“When corporations shirk their tax burden by shifting profits legitimately made in the U.S. to offshore tax havens like the Caymans, the rest of us must pick up the tab through either cuts to public spending priorities, higher taxes, or more debt,” said U.S. PIRG’s Dan Smith, a co-author of the report. A poll commissioned by the American Sustainable Business Council, the Main Street Alliance, and the Small Business Majority — organizations seeking to level the playing field between small and large businesses — found that more than 90 percent of small business owners believe that corporate tax havens are a problem, while “three-quarters of respondents agree that their small business is harmed when loopholes allow big corporations to avoid taxes.”
President Obama has been trying, since he came into office, to crack down on some of the offshore tax havens utilized by corporations, but has been stopped by conservatives and corporate lobbying every time. Instead, Republicans have designed a “small business tax cut” that would actually further enrich hedge fund managers, sports teams, and millionaires.