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Washington, D.C. – On Thursday, Senator Carl Levin (D-MI), along with co-sponsors Sheldon Whitehouse (D-RI), Mark Begich (D-AK), and Jeanne Shaheen (D-NH), introduced the Stop Tax Haven Abuse Act (S. 1533), which would close a number of loopholes that let corporations and wealthy individuals book income to offshore tax havens to avoid taxes. The Joint Committee on Taxation calculates that this legislation would save taxpayers $220 billion over ten years.
“When costly loopholes let large companies and wealthy individuals use accounting tricks to shift income to offshore tax havens like the Cayman Islands, small businesses and ordinary taxpayers are forced to foot the bill through cuts to public programs, higher taxes and more debt,” said U.S. PIRG Tax and Budget Associate Jaimie Woo.
A U.S. PIRG report found that at least 82 of the top 100 publicly traded U.S. companies have subsidiaries in offshore tax havens. The Senate Permanent Subcommittee on Investigations, chaired by Senator Levin, has estimated that altogether, tax-avoidance schemes involving tax havens cost taxpayers $100 billion every year. New estimates put the amount of lost revenue as high as $160 billion: $90 billion from corporate tax avoidance and another $40-$70 billion from individual tax evasion. The legislation introduced today closes the most egregious offshore tax loopholes.
To draw attention to tax haven abuse by large multinational corporations, U.S. PIRG members across the country mailed more than 700 postcards to a Bank of America P.O. box in the Cayman Islands, a well-known tax haven. The postcards were mailed to the Ugland House, a five-story office building in the Cayman Islands that is the registered address for 18,857 companies. All told, Bank of America operates 316 subsidiaries in tax havens and has reported approximately $17 billion in offshore profits, on which it would owe $4.5 billion in taxes, according to the company’s most recent SEC filing.
An excerpt from the postcards U.S. PIRG members sent Bank of America read:
“The fact that you relied on our tax dollars to stay in business during the financial crisis makes it all the more egregious that you now exploit every loophole you can to dodge taxes. Stop using tax havens: it’s time that you paid your share.”
Key provisions of the Stop Tax Haven Abuse Act 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 allow high-tech and pharmaceutical companies to 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 a P.O. box tax haven subsidiary with no employees.
The G-20 and the Organization for Economic Cooperation and Development, as well as leaders from the U.K. to India have pledged to take action on corporate tax avoidance.
“With lawmakers in Washington battling over the budget and struggling to reduce the deficit, these deplorable loopholes with no public interest purpose should be first to go,” said Woo. “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 to read the press release from Sen. Carl Levin on the Stop Tax Haven Abuse Act.
Click here to read a summary of the legislation on Se. Carl Levin’s website.
Click here to download a PDF of the full bill text from Sen. Levin’s website.
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U.S. PIRG, the Federation of State Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. www.uspirg.org
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