Clean Slate Tax Debate Downplays Importance of Billions Worth of Offshore Loopholes

U.S. PIRG

Statement of U.S. PIRG Tax and Budget Advocate Dan Smith on Sens. Baucus and Hatch’s tax reform framework, which would eliminate all tax breaks beyond those lawmakers were able to effectively justify:

“U.S. PIRG applauds Finance Chairman Baucus and Ranking Member Hatch for challenging lawmakers to justify dozens of tax breaks that benefit well connected special interests at the expense of average taxpayers, who must pick up the tab. Unfortunately, the focus on tax expenditures downplays the importance of closing billions worth of unjustified offshore tax loopholes that are technically not considered tax expenditures.

“America’s tax code is riddled with costly loopholes that let large companies and wealthy individuals use accounting tricks to shift income to offshore tax havens like the Cayman Islands. The winners are the big banks, pharmaceutical companies, and high-tech companies, and the losers are small businesses and ordinary taxpayers, who are forced to foot the annual bill – estimated at $150 billion in lost revenue.

“A recent Senate investigation revealed that Apple skipped out on paying taxes on $30 billion of its profits by routing that money through a phantom Irish company with no employees. Apple is far from alone in abusing these loopholes. In fact, 83 of the top 100 publicly traded companies operate subsidiaries in tax havens.

“Senator Levin’s CUT Loopholes Act would close a myriad of the most egregious offshore tax loopholes that let companies with armies of tax lawyers disguise profits made in the U.S. as “foreign” profits booked to a P.O. box shell company in a tax haven.

“Consideration of a “clean slate” must put this money back on the table as part of tax reform. As the Senate scours the tax code for wasteful tax breaks for special interests, closing offshore tax loopholes should be at the top of every lawmaker’s list.”

U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.