Offshore Tax Havens: A State-By-State Breakdown Of The Cost To Taxpayers
A Senate report estimated in 2008 that the United States loses up to $100 billion a year in tax revenue to offshore tax havens (PDF). In a report released Wednesday, the U.S. Public Interest Research Group offers a state-by-state breakdown of the cost to taxpayers of tax revenue lost to "shell companies and sham headquarters" in places like Switzerland and the Cayman Islands.
The practice soaks dutiful taxpayers in every state for hundreds of millions of dollars, according to U.S. PIRG. The citizens of New York and Texas shoulder over $8 billion a year, and the good people of California are on the hook for an extra $11 billion.
U.S. PIRG came up with the state numbers by dividing the $100 billion figure by the percentage of total federal revenue contributed by each state. The nonprofit released its report on tax day to drive home a message:
"This is the day when we're all working hard, rushing to the post office, filing our returns, and then to hear about these large multi-billion dollar corporations who have used gimmicks to avoid paying their fair share -- it's something that should end this year," says John Krieger, a staff attorney with U.S. PIRG.
U.S. PIRG's report, titled "Tax Shell Game," highlights some findings from a January report by the Government Accountability Office that found over 80 percent of the hundred biggest U.S. companies took advantage of tax havens. In 2008 the GAO found that one five-story building in the Cayman Islands, known as the "Ugland House," contained 18,857 registered businesses, very few of which had anything but a P.O. box there. Bailout beneficiaries Morgan Stanley, Citigroup, and Bank of America boast over 300 subsidiaries in the Cayman Islands.
The tax day release of the report coincides with protests at post offices across the country coordinated by the Campaign to Rebuild and Renew America Now, a coalition of groups supporting the president's budget priorities. Obama's budget calls for reigning in offshore tax havens.
In a speech on Tuesday, Obama talked about "shutting down loopholes and making sure everyone pays what they owe."
John Krieger says similar efforts by U.S. PIRG last year brought attention to tax evasion by major defense contractors like Kellogg, Brown & Root, ultimately leading to legislation to make sure contractors pay their share.
"The point is that we all pay for it," Krieger says. "The issues of tax havens, tax avoidance -- the reason they've had so much cover is that we all think of it as a D.C wonky issue, but in reality it has an effect on every taxpayer who has to take on this extra burden."
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First Posted: 05/15/09 06:12 AM ET Updated: 05/25/11 02:15 PM ET