What America Could Do with $150 Billion Lost to Offshore Tax Havens

Many corporations and wealthy individuals use offshore tax havens—countries with minimal or no taxes—to avoid paying $150 billion in U.S. taxes each year.

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Many corporations and wealthy individuals use offshore tax havens—countries with minimal or no taxes—to avoid paying $150 billion in U.S. taxes each year.

Companies that do business in the U.S. but use offshore tax havens to avoid taxes—such as Microsoft, Exxon Mobil, and Bank of America— benefit from their access to America’s markets, workforce, infrastructure and security. Shirking the taxes that pay for these benefits violates the basic fairness of the tax system. By shielding their income from U.S. taxes, corporations and wealthy individuals shift the tax burden to ordinary

Americans, who must pick up the tab in the form of cuts to public services, more debt, or higher taxes. The $150 billion lost annually to offshore tax havens is a lot of money, especially at a time of difficult budget choices.

It’s Time to End Offshore Tax Havens

Americans deserve a tax code without loopholes that allow special interests to shirk their tax burden at the expense of ordinary taxpayers. The federal government can work towards achieving that goal and recapturing much of the $150 billion lost to offshore tax havens by implementing reforms such as:

  • Eliminating incentives for U.S. companies to transfer intellectual property oversees by tightening transfer pricing rules.
  • Preventing corporations from reporting different income figures to different countries.
  • Treating the profits of “foreign” corporations that are managed and controlled in the United States the same as domestic corporations.
  • Preventing corporations from taking bigger tax credits than they are entitled to by requiring them to report full information on tax credits they receive from foreign governments.
  • Preventing U.S. multinational corporations from deferring payment of U.S. tax on the profits they attribute to their foreign entities.
  • Ending the “active financing exception” and the “controlled foreign corporation” look-through rule that let companies artificially shift profits offshore.

Download the report for details on what public interest priorities we could fund by recapturing the $150 billion lost to offshore tax havens.