Approximately $184 billion is lost annually in federal and state taxes to tax havens, according to a new report from a consumer-interest group.
In 2012, 82 of the 100 largest publicly traded U.S. corporations booked revenue to known offshore tax havens, according to U.S. PIRG, a federation of state public interest research groups. That list includes companies like Pfizer, Microsoft, Citigroup, Google, Bank of America, Caterpillar and General Electric.
While the practice denies the nation billions of dollars in revenue annually, the cost of picking up the tab varies by state, the group finds in the new report. In three states and the District of Columbia, covering the losses to offshore tax havens would cost each tax filers more than $2,500. In D.C., the combined additional federal and state tax burden on individual filers amounts to nearly $2,800. In North Dakota, Wyoming and Connecticut, it’s just under $2,550. The burden would be smallest for filers in West Virginia and Mississippi, where each filer would have to pay less than $700.
The group has advocated for states to pass laws that would minimize such tax abuse. Under one such law, states would first identify a list of known tax havens. Then, they would require businesses report the income of subsidiaries in those havens. Finally, states would tax that income according to a formula that would be designed to avoid over-taxation.
Montana was the first state to enact such a policy a decade ago. In 2010, it recovered $7.2 million, while a similar law passed recently in Oregon is expected to bring in $18 million this year, according to state estimates. Both chambers of Maine’s legislature have also given approval to such a measure. This week, a similar measure was introduced in Massachusetts.