Fact of the Week: More than 100 Big U.S. Corporations Used Offshore Tax Havens to Avoid $280 Billion in Taxes
A report out in February from Senator Bernie Sanders (I-VT), the Ranking Member of the Senate Budget Committee, shows that many U.S. corporations are effectively dodging billions in U.S. taxes. Looking at companies that are part of the Business Roundtable, a coalition of CEOs from 201 of the biggest companies in the U.S., the report found that at least 111 of these companies are using offshore tax havens to save an estimated $280 billion on taxes by holding $1 trillion in profits offshore. The report also found that 81 of the companies paid taxes at a rate that was just above half the rate that’s on the books for companies because of corporate income tax breaks. Even more appalling: 10 of the companies not only paid nothing in federal income taxes, they actually got money back from the government. The Business Roundtable, the report says, is also heavily involved in lobbying efforts to cut programs like Social Security and Medicare and increase tax breaks for companies.
Not surprisingly, Senator Sanders followed the report by calling on President Obama last week to close six corporate tax loopholes through executive action, which could raise over $100 billion over a decade. He noted that three of the six tax loopholes were created through regulation or administrative ruling rather than legislation, so they should be able to be closed by presidential action as well. The other three, he contends, can be repealed by powers the Treasure Department already has. The loopholes called out range from ways multinational companies effectively avoid paying taxes to any government to transferring ownership of a corporation to a non-US entity (aka corporate inversion)and lower tax rates paid by hedge fund managers. “Our nation has never, in the past five decades, balanced a budget with revenue levels as low as they are projected to be,” the letter to the White House says.
Some say the reason for these corporate tax breaks is to create jobs, but the evidence isn’t on their side. In fact, new analysis from the Center for Effective Government looked at large corporations with the highest and lowest effective tax rates between 2008 and 2012 and compared it to the number of jobs they created. The 14 large corporations with the lowest tax rates cut more than 10 percent of their workforce while paying absolutely no federal income taxes during this time period – despite reporting $107 billion in pre-tax profits. On the flip side, the 14 firms with the highest tax rates– those who paid close to 33 percent in taxes – expanded their workforce by more than 12 percent. The conclusion? Tax cuts don’t equal new jobs.
Closing even some of loopholes would fund universal pre-k, make college more affordable, create jobs, and dramatically reduce hunger, homelessness, and poverty.
Several years ago, CHN started the Strengthening America’s Values and Economy (SAVE) for All campaign. And we’re asking you to join us. By signing our petition, you can tell Congress we need a federal budget that invests in America and helps all of us, not just the wealthy and the big corporations.
Raise your voice for the hard-working individuals and families being ignored by Congress, just as our elected officials work on the budgets for the next fiscal year. You can sign by using the big red “Sign the Petition!” button above or by clicking here.
If you work for an organization that supports investing in prosperity for all and preventing poverty by closing tax loopholes and stopping Pentagon waste, encourage them to sign on to the SAVE for All organizational letter before March 20.