By Joe Rasmussen   Gazette Xtra

This month, as millions of hard-working Wisconsinites paid their taxes and leaders in Washington debate budget proposals, some of America’s largest corporations and wealthiest individuals are avoiding the taxes they owe—and it’s hitting our budget hard. To make up the lost revenue, the average Wisconsin taxpayer would have to shoulder an additional $773 burden in higher taxes, according to a recent WISPIRG report.

By using complicated accounting tricks to exploit loopholes in the tax code, corporations and wealthy individuals move U.S. income to shell companies in overseas tax havens such as the Cayman Islands. They pay little or no taxes on those profits, leaving the rest of us to pick up the tab. Each year, the federal treasury loses an estimated $150 billion in revenue to offshore tax havens.

The good news is that momentum to close these loopholes is building and bipartisan. President Obama and Wisconsin’s own Paul Ryan have suggested closing loopholes to address our budget deficit. Recently, the Senate passed a bipartisan budget amendment demonstrating further support for closing these loopholes. We applaud the senators who proposed and supported this amendment to give budget writers the authority to “end offshore tax abuses used by large corporations.”

Closing offshore tax loopholes is an obvious first step to lessen our budget woes at the state and federal levels. At the federal level, closing tax loopholes would have generated more than enough revenue to offset the across-the-board spending cuts that went into effect in March.

This tax dodging has very real consequences for our state budget. According to the WISPIRG report, Wisconsin’s taxpayers lost up to $800 million to offshore tax havens last year. That’s enough money to pay the tuition and fees of more than 100,000 in-state students in the UW System.

Unfortunately, the use of tax havens has become standard practice in corporate America. At least 83 of the 100 largest publicly traded American corporations have subsidiaries in tax-haven countries. That includes Bank of America, Goldman Sachs, Wells Fargo and JP Morgan Chase—banks rescued by bailouts in 2008, courtesy of American taxpayers —which use a total of 551 offshore subsidiaries to avoid taxes. Technology corporations such as Microsoft can register intellectual property rights to offshore subsidiaries, even when the technology was developed in the U.S., to shift profits earned in the U.S. offshore to avoid taxation. These practices are all technically legal, but they aren’t right.

These companies benefit from our nation’s educated workforce, infrastructure and security, yet they do everything they can to avoid paying what they should. When corporations don’t pay, they dump their tax burden on the rest of us, forcing us to make up the difference through cuts to public services, a bigger deficit, or higher taxes.

Closing offshore tax loopholes should be at the top of every lawmaker’s list. With serious budget challenges before us, now is the time to close these tax loopholes—and Wisconsin lawmakers should be the leaders to make it happen.

Joe Rasmussen is a program associate for WISPIRG, the Wisconsin Public Interest Research Group. This consumer group aims to stand up to special interests that threaten our health and safety, financial security, or right to fully participate in our democratic society. Contact Rasmussen at 608-268-1656 or [email protected].

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