Yesterday, millions of Americans rushed to the post office to file their federal income tax returns. For all of us, the checks we wrote were an average of $434 higher because of the burden we are forced to shoulder for major corporations and wealthy individuals who use offshore tax havens to avoid paying their share.
According to a new U.S. Public Interest Research Group (U.S. PIRG) report, many of the largest corporations as well as individuals move money made here in the United States offshore in order to avoid paying federal taxes -- to the tune of $100 billion per year. That $100 billion has to be made up by the rest of us.
This month it came to light that America's largest corporation, General Electric, reported profits of $5.1 billion in the United States, yet appear to have paid no federal income taxes in 2010. The Columbia Journalism Review published a recent article that examines G.E.'s flurry of claims attempting to refute this finding. Regardless of all their objections and explanations, you can bet that the nearly 1,000 people working in G.E.'s tax department used every trick in the trade, including shifting profits to their 14 subsidiaries in tax haven countries, to get their bill down to a number smaller than that of most small businesses and households.
That there is so much confusion surrounding this issue -- or that G.E. deploys an army of tax lawyers and accountants -- illustrates the scale at which these giant corporations use complicated loopholes to minimize paying their fair share.
G.E., however, isn't alone. Corporations like AIG, American Express, Bank of America, Comcast, Coca-Cola, Dell, Exxon-Mobil, Home Depot, Pepsi, and Pfizer have all set up offshore accounts to avoid their taxes. According to a GAO study, more than 80 percent of America's biggest banks and corporations, including some of those we bailed out with TARP funds, have subsidiaries in offshore tax havens that they use to minimize or wipe out their taxes altogether.
These corporations take advantage of, among other things, an education system that educates much of their workforce, government funded research and development, and infrastructure to transport their products throughout the country, but leave it up to the rest of us to pay the bill. Meanwhile, the small businesses that don't have an army of accountants at their disposal are at a disadvantage in the marketplace. The system is backwards and it has to change.
For months, Congress has considered, and passed, deep cuts to many essential public programs, affecting everything from education, to consumer protection, to clean air and drinking water. Instead, our leaders should take a close look at our unbalanced tax code and close the outrageous tax loopholes that allow the wealthiest individuals and corporations to skip out on paying their share.