Offshore Tax Havens Cost Average New Jersey Taxpayer $668 a Year, Each New Jersey Small Business $2,116, New Study Finds

Media Contacts
Gideon Weissman

former Policy Analyst, Frontier Group

Congressman Frank Pallone announces cosponsorship of the Stop Tax Haven Abuse Act.

NJPIRG

NEW BRUNSWICK – With tax day approaching, a new study released by NJPIRG found that the average New Jersey taxpayer in 2011 would have to shoulder an extra $668 tax burden to make up for revenue lost from corporations and wealthy individuals shifting income to offshore tax havens. The report, Picking Up The Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens, additionally found that to cover the cost of the corporate abuse of tax havens in 2011, small businesses in New Jersey would have to foot a bill of over $2,116 on average. 

Every year, corporations and wealthy individuals avoid paying an estimated $100 billion in taxes by shifting income to low or no tax offshore tax havens. Of that $100 billion, $60 billion in taxes are avoided specifically by corporations. A GAO study found that at least 83 of the top 100 publically traded corporations use offshore tax havens. 

“When corporations shirk their tax burden by using accounting gimmicks to stash profits legitimately made in the U.S. in offshore tax havens like the Caymans, the rest of us must pick up the tab,” said Gideon Weissman, Program Associate with NJPIRG. “Responsible small businesses don’t just foot the bill for corporate tax dodging, they are put at a competitive disadvantage since they can’t hire armies of well paid lawyers and accountants to use offshore tax loopholes.”

Gideon Weissman was joined by NJPIRG Student Chapter members from Rutgers-New Brunswick, and Congressman Pallone released a statement for the event announcing his support for a bill that will end tax haven abuse.

Justin Habler, a sophomore at Rutgers-New Brunswick said: “It is absurd that while Congress asks students to make real sacrifices, with cuts to Pell Grants and increases in loan interest rates, big corporations like Fedex and GE are allowed to dodge paying their fair share, and many years pay zero taxes.”  He continued, “We are glad that Congressman Pallone is standing up for the students and small businesses in his district by cosponsoring the Stop Tax Haven Abuse Act.”

The report recommends closing a number of offshore tax loopholes, many of which are included in the Stop Tax Haven Abuse Act (H.R. 2669) and Cut Unjustified Tax Loopholes Act (S.2075).  Congressman Pallone announced via statement that is becoming a cosponsor of the House legislation, joining New Jersey congressmen Andrews, Holt, Pascrell, and Rothman.  Pallone’s statement urged passage of the bill, including the passage:

“The Stop Tax Haven Abuse Act, HR 2669, would target the approximately $100 billion in lost revenue that arises each year from companies using loopholes in the tax system.  This legislation would close many of the loopholes that certain companies currently abuse for their own benefit.  These are some of the reasons that I am happy to co-sponsor the legislation.  It would be a significant step towards fairness in our tax system”

 

Weissman thanked Pallone, saying: “NJPIRG thanks Congressman Pallone for cosponsoring the Stop Tax Haven Abuse Act, which could end one of the most egregious corporate tax dodging schemes.  Taxpayers and small businesses tired of picking up the tab for companies like GE and Wells Fargo should tell Congress that now is the time to close these unfair tax loopholes.”

 

Using complex tax avoidance schemes, many of America’s largest corporations drastically shrink their tax bill: 

 

• Google uses techniques nicknamed the “double Irish” and the “Dutch sandwich,” involving two Irish subsidiaries and one in Bermuda – a tax haven – that helped shrink its tax bill by $3.1 billion between 2008 and 2010.

• Wells Fargo paid no federal income taxes between 2008 and 2010 despite being profitable all three years in part due to its use of 58 offshore tax haven subsidiaries.

• G.E. received a $3.3 billion tax refund in 2010 despite reporting over $5 billion in U.S. profits to shareholders. The company has $94 billion parked offshore and uses 14 tax haven subsidiaries.

 

“It is appalling that these companies get out of paying for the nation’s infrastructure, education system, security, and large market that help make them successful,” added Weissman. 

 

Click here for a copy of “Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens.”

 

Click here to see an earlier study showing 30 companies that paid more in campaign contributions and lobbying expenses than they did in federal income taxes.

 

Click here for Congressman Pallone’s letter announcing his support for the Stop Tax Haven Abuse Act.

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NJPIRG, the New Jersey Public Interest Research Group, is a non-profit, non-partisan public interest advocacy organization that takes on powerful interests on behalf of its members, working to win concrete results for our health and well-being.