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New Legislation Introduced to Close Offshore Tax Loopholes
Congressman Lloyd Doggett Introduces the Stop Tax Haven Abuse Act with 45 Cosponsors
WASHINGTON - April 15 - Statement of U.S. PIRG Tax and Budget Advocate Dan Smith on the introduction of the Stop Tax Haven Abuse Act by Congressman Lloyd Doggett (D-TX) and 45 original cosponsors, including Congressman Chris Van Hollen, the ranking member of the House Budget Committee. Among other provisions, this legislation would close a number of loopholes that let corporations and wealthy individuals shift income to offshore tax havens to avoid paying taxes.
“As hardworking Americans file their taxes today, they should be mindful that our tax code is riddled with costly loopholes that let large companies and wealthy individuals use accounting tricks to shift their income to offshore tax havens like the Cayman Islands. The Stop Tax Haven Abuse Act would close many of the most egregious offshore tax loopholes. This legislation is based on the premise that if a U.S. company earns profits here in the U.S., with the benefit of America’s educated workforce, infrastructure, and large consumer base, it should pay taxes in America, like small businesses and everyday taxpayers do.
“The loopholes that help big banks, pharmaceutical companies, and high-tech companies dodge taxes hurt small businesses and ordinary taxpayers, who are forced to foot the bill for an estimated $150 billion annually in lost revenue. A recent U.S. PIRG report found that the average taxpayer in 2012 would have to shoulder an extra $1,026 in taxes to cover the cost of offshore tax dodging by large corporations, and the average small business would have to pay $3,067.
“This strong legislation comes at a critical time, with lawmakers in Washington battling over how to reduce the deficit while funding public priorities. Closing these loopholes should be at the top of every lawmaker’s list.
“Key provisions of the legislation include:
- Stopping U.S. companies that are managed and controlled in the U.S. from claiming to be foreign to avoid taxes.
- Closing loopholes that let high-tech and pharmaceutical companies license the patents for their products to sham shell companies in tax havens so they can book their profits there and avoid taxes.
- Requiring full and honest reporting from companies to determine if they’re booking profits to places where they are doing legitimate business, versus to a P.O. box tax haven subsidiary with no employees.
“Congress should pass this legislation immediately to level the playing field for small businesses, restore fairness to our tax system, and raise revenue to fund public priorities or cut the debt.”
Click here for U.S. PIRG’s report revealing how much average taxpayers and small business owners would have to pay to cover the cost of offshore tax dodging.
Click here for the U.S. PIRG Education Fund’s study revealing the impact of offshore tax havens on state budgets.