From The New Zealand Herald

The US loses $150 billion in federal revenue annually when earnings are transferred to tax havens like the Cayman Islands.

US taxpayers would need to pay an average of $1,259 more a year to make up the federal and state taxes lost to corporations and individuals sheltering money in overseas tax havens, according to a report.

“Tax haven abusers benefit from America’s markets, public infrastructure, educated workforce, security and rule of law – all supported in one way or another by tax dollars – but they avoid paying for these benefits,” US Public Interest Research Group said in the report released today, the deadline for filing 2013 taxes.

“Instead, ordinary taxpayers end up picking up the tab, either in the form of higher taxes, cuts to public spending priorities, or increases to the federal debt,” it said.

In total, the United States loses $150 billion in federal revenue and another $34 billion in state revenue annually because of money parked in tax havens, the Boston-based consumer advocacy group concluded.

That’s almost 5 per cent of total federal revenue. The US is projected to raise $3.032 trillion this year, up from $2.775 trillion for fiscal year 2013, according to the Congressional Budget Office.

US PIRG released the report as it tries to increase pressure on lawmakers to change how companies pay taxes on income credited to foreign subsidiaries.

The largest US-based companies have accumulated $1.95 trillion outside the US, up 11.8 per cent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News.

Read the full report at: https://www.documentcloud.org/documents/1114201-taxreport.html

Together, they added $206 billion to their stockpiles of offshore profits last year, leaving earnings in low-tax countries until Congress gives them a reason not to. Three multinational firms – Microsoft, Apple and IBM – added $37.5 billion, or 18.2 percent of the total increase.

Prospects have dimmed for a revision of the US tax code this year that would have addressed offshore havens.

President Barack Obama, House Ways and Means Committee Chairman Dave Camp, and Senate Finance Chairman Ron Wyden, support lowering the corporate rate and making significant changes to the taxation of foreign income.

No proposals – including a draft plan from Camp to lower the corporate rate to 25 per cent and levy a smaller one-time tax on accumulated profits – have been scheduled for a vote.

–       Bloomberg

PHOTO: Seven Mile Beach on Grand Cayman Island.

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