Executive Director, CoPIRG
Executive Director, CoPIRG
Colorado Small Business $2,957
With Tax Day approaching, CoPIRG was joined today by Zach Hepner, owner of Velosoul Bikes and Marlene Nuechterlien owner of Caboodle Gifts to release a new study which revealed that the average Colorado taxpayer in 2012 would have to shoulder an extra $1,183 in taxes to make up for the revenue lost due to the use of offshore tax havens by corporations and wealthy individuals and the average small business would need to shoulder $2,957.
“Tax dodging is not a victimless offense. When companies use accounting gimmicks to move their profits to tax haven shell companies, the rest of us have to pick up the tab,” said Justine Bufmack, campaign coordinator for CoPIRG. “With the nation facing such serious budget challenges, it’s a no-brainer that we need to close these loopholes and stop letting large corporations avoid paying what they should.”
Every year, corporations and wealthy individuals avoid paying an estimated $150 billion in taxes by using complicated accounting tricks to shift their profits to offshore tax havens. Of that $150 billion, $90 billion is avoided specifically by corporations.
The federal revenue lost to offshore tax havens would be more than enough to cover the automatic federal budget cuts caused by the sequester. A recent CoPIRG report also found that offshore tax dodging costs Colorado $504 million annually.
The report found that the average Colorado small business would have to pay $2,957 to cover the cost of offshore tax dodging by large corporations. Offshore tax havens give large multinationals a competitive advantage over responsible small businesses which don’t use tax havens and get stuck footing the bill for corporate tax dodging.
At the event, CoPIRG unveiled a list of 60 Colorado small businesses that have signed onto a letter calling for Senator Bennet, who is on the powerful Finance Committee, to move legislation forward that closes these tax loopholes.
“Caboodle Gifts does its small part to make our community better,” said Marlene Nuechterlien, owner of the Denver based gift store. “Our taxes help pay for roads, bridges, schools, and other public services that my business and my customers depend on. Big corporations should do the same and pay their fair share for the services that helped them build their profits.”
Many of America’s largest and best-known corporations use these complex tax avoidance schemes to shift their profits offshore and drastically shrink their tax bill:
- Pfizer, the world’s largest drug maker, made 40 percent of its sales in the U.S. over the past five years, but thanks to their use of offshore tax loopholes they reported no taxable income in the U.S. during that time. The company operates 172 subsidiaries in tax havens and has $73 billion parked offshore which remains untaxed bythe U.S., according to its own SEC filing. That is the second highest amount of money sitting offshore for one U.S. multinational corporation.
- Microsoft avoided $4.5 billion in federal income taxes over a three year period by using sophisticated accounting tricks to artificially shift its income to tax-friendly Puerto Rico. Microsoft maintains five tax haven subsidiaries and keeps 70 percent of its cash offshore, a total of $60.8 billion, on which it would otherwise owe $19.4 billion in U.S. taxes.
- Citigroup– a bank that was bailed out by taxpayers during the financial meltdown of 2008 – maintains 20 subsidiaries in tax havens and has $42.6 billion sitting offshore, on which it would otherwise owe $$11.5 billion in taxes, according to its ownSEC filing. Citigroup currently ranks eighthamong U.S. multinationalsfor having the most money stashed offshore.
“It is appalling that these companies get out of paying for the nation’s infrastructure, education system, and security that help make them successful,” added Bufmack.
The report recommends closing a number of offshore tax loopholes. Many of these reforms are included in the Cut Unjustified Tax Loopholes Act (Senate Bill 268), which CoPIRG is calling on Senators Bennet and Udall to support.
Click here to see an earlier study showing how offshore tax dodging harms Colorado’s budget.