The Transylvania Times -

Close Tax Loopholes


Today is the final day federal and state income taxes must be filed. Filing taxes can be discouraging for many people, particularly for those living from paycheck to paycheck. What might be more frustrating than actually filing taxes and paying off any shortfall is that while the majority of Americans dutifully pay their taxes, many of our biggest and most profitable corporations either pay very little or nothing.

According to extensive research conducted by the federation of state Public Interest Research Groups (U.S. PIRG), on average, Americans would pay $1,026 less this year in federal taxes if the federal government collected taxes on money stashed in overseas accounts. And that’s just the savings for individuals. Small businesses would save an additional $3,067 if just the overseas tax havens were closed.

It’s not just corporations that benefit from these overseas tax havens; it’s also individuals who have the means to place their money overseas. Annually, individuals who use these tax havens avoid paying about $60 billion in taxes. Add that to the $90 billion that multinational corporations avoid paying and we have $150 billion. Over a decade, that’s $1.5 trillion the federal government is losing; money that could be paid to reduce the national debt, reduce the tax burden on those least able to afford it, or maintain government services.

These companies should pay taxes for the same reasons most of us do – they benefit from the services provided by the federal and state governments. They use the American workforce, the majority of whom have been educated in public schools; use American highways, seaports and airports; rely on the American law enforcement and military for protection both at home and overseas, etc.

But while they benefit from these government resources, many do not pay for them or pay a paltry rate. Pfizer, the world’s largest drug maker, made 40 percent of its sales in the U.S. but reported no taxable income for the past five years. According to PIRG, it has $73 billion tucked away offshore. Citigroup has avoided paying $11.5 billion in taxes. Citigroup also received taxpayers’ money during the bailouts in 2008, as did the Bank of America, which has avoided paying $4.5 billion in taxes by using offshore tax havens.

Some may argue that if the federal government closes these loopholes for offshore tax havens, it will stymie job creation. That’s not true. In 2010, Pfizer announced it would cut 6,000 jobs or 18 percent of its work force at its manufacturing plants over the next five years. Just four months ago, Citigroup announced that it was going to cut 11,000 jobs.

In reality, closing the overseas tax loopholes might stimulate American job growth. The vast majority of job growth has come from small businesses. Yet, these tax havens give the larger corporations a financial advantage because the taxes they should have paid are being partially transferred to small businesses. If these tax havens were closed, it might reduce the burden on small business owners (depending on how the government chose to use the revenue). At the very least, it would make the tax burden more equitable.

It’s not just the overseas tax havens the federal and state government need to look at closing. They also need to look at the numerous deductions. In 2012 Duke Energy has nearly $1.8 billion in profits. It did not pay taxes. It actually received a rebate of $46 million from the federal government. Something is wrong when one of the largest energy companies in the country that is very profitable actually receives money from the government. Imagine what would happen if people who earned $50,000 a year paid no taxes and were actually given an additional $5,000 annually by the government.

What is more troubling is that Duke Energy is a monopoly that is supposed to be regulated by, not subsidized by, the government. And yet, the opposite is happening. In fact, Duke, despite profits of nearly $10 billion and $300 million in rebates from the government over the past four years, is asking for another rate increase.

Our federal fiscal house is a wreck. One way to start cleaning it up would be to close the offshore tax havens and other loopholes, and have American corporations and individuals pay their fair share. That would be the patriotic thing to do. Maybe then Americans who have no access to these loopholes would be more willing to take a few cuts to their Social Security or Medicare if everyone had “some skin in the game.”


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