I have believed for a long time that our federal tax code is badly in need of reform and revision. There are far too many ways for the rich and powerful to avoid paying their fair share of taxes and that must change. U.S. 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 recent report. U.S. Public Interest Research Group (PIRG) said in the report released last month:
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. 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.
All told, the U.S. loses $150 billion in federal revenue and another $34 billion in state revenue annually because of money parked away in tax havens, the Boston-based consumer advocacy group concluded. It should be noted that’s almost 5 percent of total federal revenue. The U.S. is projected to raise $3.032 trillion this year, up from $2.775 trillion for fiscal year 2013, according to the Congressional Budget Office. U.S. 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 U.S.-based companies have accumulated $1.95 trillion outside the U.S., up 11.8 percent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News.
These companies, in combination, 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 Corp., Apple Inc. and International Business Machines Corp. – added $37.5 billion, or 18.2 percent of the total increase. It appears that there is little hope for a revision of the U.S. tax code this year that would have addressed offshore havens. President Obama; House Ways and Means Committee Chairman Dave Camp, a Michigan Republican; and Senate Finance Chairman Ron Wyden, an Oregon Democrat, support lowering the corporate rate and making significant changes to the taxation of foreign income.
At press time, no proposals – including a draft plan from Rep. Camp to lower the corporate rate to 25 percent and levy a smaller one-time tax on accumulated profits – have been scheduled for a vote. With this being an election year for all members of the U.S. House of Representatives and for some Senators, we shouldn’t expect the incumbents to “bite the hand” that just might “feed them” politically.
Source: Buffalo News
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