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ASBURY PARK – With Tax Day approaching, it’s a good time to be reminded of where our tax dollars are going. NJPIRG and NJ Citizen Action were joined today by Senator Robert Menendez, Congressman Frank Pallone (NJ-6), Mayor Ed Johnson of Asbury Park, and Jerome Beckman, owner of Beckman’s Newsstands, to release a new NJPIRG study on offshore tax dodging. The report revealed that the average New Jersey taxpayer in 2012 would have to shoulder an extra $1,260 in taxes to make up for the revenue lost due to the use of offshore tax havens by corporations and wealthy individuals.
“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 Peter Skopec, Program Associate at NJPIRG. “With the nation facing such serious budget challenges, it’s a no-brainer that we need to close these loopholes that let 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.
“There is nothing fair about hiding income abroad to avoid responsibility to the community that protects you, educates your children, provides the infrastructure you need to travel safely and the freedom and constitutional rights this nation provides,” said Senator Menendez, a member of the Senate Banking and Finance Committees. “The wealthiest Americans and the biggest corporations have earned their success, but they also have a responsibility -- as members of the greater American community that has helped them build that success – to be part of the solution. It’s the right thing, and the fair thing, to do.”
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 NJPIRG report also found that offshore tax dodging costs New Jersey $2.8 billion in lost state revenue annually. This would be enough to repair Hurricane Sandy’s damage to New Jersey’s gas and electric utilities systems, to fix NJ Transit’s trains and equipment, and to make up for the projected drop in state revenue caused by the storm combined.
“All Americans should do their part to help restore and grow our economy especially given the unfortunate and harsh cuts so many critical federal programs have had to face recently,” said Congressman Pallone. “New Jersey taxpayers, many of whom are still trying to rebuild their homes, communities and business after Sandy, should not have to bear the burden of costly tax loopholes for the wealthiest Americans. We need a fair tax system that is designed to prioritize the middle class, not just the super-rich.”
NJPIRG’s report additionally found that the average New Jersey small business would have to pay $3,941 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.
“Beckman’s does its part to make our community better,” said Jerome Beckman, owner of the Beckman’s Newsstand in Asbury Park. “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, for example, made 40 percent of its sales in the U.S. over the past five years, but thanks to the drugmaker’s use of offshore tax loopholes the company 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 by the U.S., according to its own SEC filing. That is the second highest amount of money sitting offshore for one U.S. multinational corporation.
“The citizens of New Jersey are doing their part, said Ann Vardeman, Organizer with New Jersey Citizen Action. “Unfortunately, many corporations shirk their responsibility to support the infrastructure that makes it possible for them to do business in this state. “
NJPIRG’s 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).
For a copy of “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens or to see an earlier study showing how offshore tax dodging harms New Jersey’s budget, go to www.njpirg.org.
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