Statement by FACT Deputy Executive Director Clark Gascoigne
WASHINGTON, D.C. – The offshore companies controlled by Treasury Secretary-designate Steven Mnuchin featured prominently in his Senate confirmation hearings held last week in Washington. It was revealed that the former investment banker managed companies with assets in Anguilla and the Cayman Islands, both widely recognized as tax havens.
Tax Avoidance, Illicit Financial Flows, and Global Development: A Call for a United Nations Tax Body
Thursday, January 12, 2016
Join the FACT Coalition and several other groups for a conversation with Foreign Minister Guilluame Long of Ecuador—as they take over the presidency of the G77 + China group of 134 developing nations—to discuss tax avoidance, illicit financial flows, and calls for a United Nations tax body.
2016 is coming to an end. This year has certainly been an eventful one—we have witnessed several document leaks revealing the closely guarded secrets of the offshore world, and a divisive election where the issue of tax avoidance and offshore loopholes were highlighted by both campaigns.
In April, the Panama Papers gave us 14.5 million documents exposing the offshore dealings of the ultra-wealthy, transnational criminals, multinational companies, and even world leaders. One question often asked when the documents were released “where are the Americans?” the answer simply is that Americans don’t need to go abroad to set up anonymous shell companies. It is, unfortunately, much easier for Americans to set them up onshore—in states like Nevada, Wyoming, and Delaware.
For more than a decade we have seen a steep climb in the amount of money kept offshore by multinational companies. This has resulted in $2.5 Trillion to remain untaxed—at an estimated cost of $700 billion to the US Treasury. Throughout the 2016 election, both presidential candidates pledged to close loopholes that allow corporations to dodge taxes and stop companies from booking their profits overseas. Though the follow-through has yet to be seen. Many have even argued that Donald Trump’s victory was the result of a frustrated middle class that increasingly feels over-burdened, while they see the wealthy and corporations—following their own set of rules—shifting their responsibilities onto them.
A new report from U.S. PIRG Education Fund finds that multinational companies dodge an estimated $147 billion in federal and state taxes annually through offshore tax haven loopholes, shifting that burden instead onto small businesses and individual taxpayers. Titled “Picking Up the Tab 2016: Small Businesses Bear the Burden for Offshore Tax Havens,” the study estimates that each small business, on average, owes $5,186 more on its annual tax bill to collectively make up for the federal and state corporate tax revenue lost to offshore tax havens.
Multinational Companies Dodging $147 Billion Annually in State and Federal Taxes through Offshore Tax Schemes
WASHINGTON, D.C. – A new report from U.S. PIRG Education Fund finds that multinational companies dodge an estimated $147 billion in federal and state taxes annually through offshore tax haven loopholes. The report explains the staggering cost to small businesses and individual taxpayers, who are forced to shoulder the increased tax burden.
Increasingly the issues of tax avoidance and financial secrecy are drawing the attention of a broader audience. Both issues were repeatedly mentioned throughout the presidential election by both candidates. Donald Trump’s original tax plan even went as far as to end deferral, though updates to the plan in September omitted any position on it. With the results of the election in, FACT and our members are analyzing what they mean for reform here at home. More on that in the weeks to come.
The EU commission’s decision in August to force Apple to pay back $14 billion in dodged taxes to Ireland served as a wake-up call to many investors—tax avoidance is a serious risk. A recent article in the Financial Times, explained how several major funds and investment groups are deeply concerned with companies’ increasing reliance on tax avoidance schemes. One such fund, Nordea Asset Management—has written to a number of companies—including Alphabet and Apple. In the letter, they ask that companies lay out their tax risks and that—if they don’t comply by January—they “will rally other investors and propose shareholder resolutions in 2017.” Four other fund houses in the UK—representing almost £1tn of assets—have also written to the board of Alphabet to raise concerns about its tax arrangements.
