We could not verify the information written in this article, however, it appears to be more correct, then not. This is fast becoming a major concern. When individuals are caught doing this very act, without sharing the information with the IRS AND paying the taxes, they are subject to extensive fines and extended vacations in Federal prisons.
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States Lost $40 Billion in Tax Revenue from Offshore Profit Shifting
Washington D.C. (February 6, 2013)
By Michael Cohn
State budgets across the country collectively lost an estimated $40 billion in tax revenue due to corporations and individuals shifting their profits and income to offshore tax havens, according to a new report.
The report, from the U.S. Public Interest Research Group, estimated that states lost $28 billion from the corporate abuse of tax havens and $12 billion from individuals, at a time when many states have been forced to cut their budgets drastically due to shrinking revenue after the financial crisis.
The $40 billion roughly equals the total amount spent by all state and local governments on firefighters in 2008, and enough money to cover the educational costs for 3.7 million children for one full year.
“Tax dodging is not a victimless offense,” said Dan Smith, tax and budget advocate for the U.S. PIRG Education Fund, who co-authored the report. “When corporations skirt taxes, the public is stuck with the tab. And since offshore tax dodgers avoid both state and federal taxes, they hurt everyday taxpayers twice. States should be using that money to benefit the public.”
At the national level, offshore profit shifting cost federal taxpayers $150 billion each year, more than enough to cover the scheduled spending cuts set to take effect in a few weeks.
“Offshore tax abuses undermine public confidence in our tax system,” said Rep. Lloyd Doggett, D-Texas, a senior member of the House Ways and Means Committee, who appeared at a U.S. PIRG press conference Tuesday. “They add to both the deficit and the tax burden imposed on small businesses and individuals that play by the rules. In quantifying the enormous cost to our economy of tax haven abuse, U.S. PIRG has once again offered valuable work. More state and federal action is required to ensure that the cost of necessary security and other public services is shared fairly.”
As of 2008, at least 83 of the top 100 publicly traded corporations in the U.S. used tax havens, according to the Government Accountability Office. At the end of 2011, 290 of the top Fortune 500 companies reported that they collectively held $1.6 trillion offshore, according to a report from the advocacy group Citizens for Tax Justice.
Among the examples cited in the reports, Google used accounting techniques nicknamed the “Double Irish” and the “Dutch Sandwich,” involving two Irish subsidiaries and one in Bermuda, to help shrink its tax bill by $3.1 billion from 2008 to 2010. Wells Fargo paid no federal income taxes in 2008, 2009 and 2010, despite being profitable all three years, largely due to its use of 58 offshore tax haven subsidiaries.
Microsoft avoided $4.5 billion in federal income taxes over three years by using sophisticated accounting tricks to artificially shift its income to tax-friendly Puerto Rico. The company pays its Puerto Rican subsidiary 47 percent of the revenue generated from its American sales, despite the fact that those products were developed and sold in the U.S.
The $40 billion roughly equals the total amount spent by all state and local governments on firefighters in 2008, and enough money to cover the educational costs for 3.7 million children for one full year.
“Tax dodging is not a victimless offense,” said Dan Smith, tax and budget advocate for the U.S. PIRG Education Fund, who co-authored the report. “When corporations skirt taxes, the public is stuck with the tab. And since offshore tax dodgers avoid both state and federal taxes, they hurt everyday taxpayers twice. States should be using that money to benefit the public.”
At the national level, offshore profit shifting cost federal taxpayers $150 billion each year, more than enough to cover the scheduled spending cuts set to take effect in a few weeks.
“Offshore tax abuses undermine public confidence in our tax system,” said Rep. Lloyd Doggett, D-Texas, a senior member of the House Ways and Means Committee, who appeared at a U.S. PIRG press conference Tuesday. “They add to both the deficit and the tax burden imposed on small businesses and individuals that play by the rules. In quantifying the enormous cost to our economy of tax haven abuse, U.S. PIRG has once again offered valuable work. More state and federal action is required to ensure that the cost of necessary security and other public services is shared fairly.”
As of 2008, at least 83 of the top 100 publicly traded corporations in the U.S. used tax havens, according to the Government Accountability Office. At the end of 2011, 290 of the top Fortune 500 companies reported that they collectively held $1.6 trillion offshore, according to a report from the advocacy group Citizens for Tax Justice.
Among the examples cited in the reports, Google used accounting techniques nicknamed the “Double Irish” and the “Dutch Sandwich,” involving two Irish subsidiaries and one in Bermuda, to help shrink its tax bill by $3.1 billion from 2008 to 2010. Wells Fargo paid no federal income taxes in 2008, 2009 and 2010, despite being profitable all three years, largely due to its use of 58 offshore tax haven subsidiaries.
Microsoft avoided $4.5 billion in federal income taxes over three years by using sophisticated accounting tricks to artificially shift its income to tax-friendly Puerto Rico. The company pays its Puerto Rican subsidiary 47 percent of the revenue generated from its American sales, despite the fact that those products were developed and sold in the U.S.
