Study: Offshore Tax Dodging by U.S. Multinationals Costs Taxpayers $90 Billion per Year

Research Increases Pressure on Congress to Address the Hemorrhaging of the American Tax Base

OECD’s Base Erosion and Profit Shifting (BEPS) Package “Important First Step” Towards Curtailing Abusive Tax Avoidance, but More Must Be Done

WASHINGTON, DC – The Financial Accountability and Corporate Transparency (FACT) Coalition applauded a new report from two of its members detailing the serious consequences of offshore tax haven abuse on U.S. taxpayers.  Published today by Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund (U.S. PIRG), the study reveals that the nation’s largest multinational corporations dodge nearly $90 billion in U.S. taxes annually through the abuse of offshore tax haven loopholes, shifting the country’s tax burden onto small businesses and individual Americans.

The research reveals that Fortune 500 corporations collectively retain 7,622 tax haven subsidiaries and have $2.1 trillion parked offshore, where they are avoiding up to $620 billion in U.S. taxes.

“Our report demonstrates the extent to which offshore tax avoidance has become standard practice among multinational corporations,” said Bob McIntyre, Director and co-author of the report with Citizens for Tax Justice. “It is absolutely ridiculous that Congress has not stepped in to stop this practice.”

“When corporations dodge their taxes, the public ends up paying,” said Ana Owens, Tax & Budget Advocate with the United States Public Interest Research Group Education Fund. “The American multinationals that take advantage of tax havens use our roads, benefit from our education system and large consumer market, and enjoy the security we have here, but are ultimately taking a free ride at the expense of other taxpayers.”

The research raises pressure on policymakers to close the abusive offshore tax loopholes that erode the U.S. tax base and favor the biggest multinational corporations at the expense of the American economy.

“It’s high time Congress takes a stand against multinational corporations that shift their profits offshore and avoid paying their fair share of taxes,” said Rebecca Wilkins, executive director of the FACT Coalition, which unites over 100 leading small business, faith-based, human rights, anti-corruption, public-interest, government watchdog, labor, and global development organizations. “When Congress incentivizes multinational corporations to continue avoiding their taxes by manipulating their tax bills, small businesses and average American taxpayers have to pick up the tab in the form of higher taxes, cuts to public programs, and bigger government deficits.”

“Loopholes shouldn’t be the status quo. We must ensure that our tax system is fair, transparent, and benefits all of us,” said Eric LeCompte, Executive Director of Jubilee USA Network.

BEPS Process an “Important First Step”

While abusive tax avoidance is a serious drain on the U.S. economy, the nature of the problem is truly global in scale.  Global leaders from the world’s largest economies realized the pernicious effects of tax haven secrecy and abusive transfer pricing in the wake of the financial crisis.  They recognized the importance of addressing the issue with a coordinated, global approach, and therefore commissioned the Organization for Economic Cooperation and Development (OECD) to carry out a process of research on (tax) Base Erosion and Profit Shifting (BEPS) and propose coordinated measures to globally curtail the damaging phenomena.

The OECD just released its final package of proposals this week ahead of the G20 Finance Ministers’ meeting in Lima, which FACT hailed as a good first step towards addressing the issue of global tax avoidance.

“Tax evasion and avoidance are a truly global scourge, undermining every economy from the United States and European Union to the poorest economies in Africa and Asia,” said Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity.  “While the BEPS proposals are far from perfect, they are an important first step towards ensuring that multinational corporations pay all of the taxes that they owe in the places that they actually make their profits.  They will be a huge boost to taxpayers in the U.S. and around the world.”

“Despite what the lobbyists for the richest multinational corporations say, supporting and implementing the BEPS packages is in the interest of the American people and our economy,” said Scott Klinger, Director of Revenue and Spending Policies at the Center for Effective Government.

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Notes to Editors:

  • Click here to read an HTML version of this press release on our website.
  • Click here to read the report from CTJ and U.S. PIRG.
  • Click here to read more about the BEPS proposals from the OECD.

Journalist Contact:

Clark Gascoigne
Deputy Director
FACT Coalition
cgascoigne@nullthefactcoalition.org
+1 202.813.0290


 

Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites civil society representatives from small business, labor, government watchdog, faith-based, human rights, anti-corruption, public-interest, and international development organizations. We seek an honest and fair corporate tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the legitimate financial system. 

For more information, visit www.thefactcoalition.org