Read "The Hidden Cost of Offshore Tax havens: State Budgets Under Pressure from Tax Loophole Abuse" report here
.CHARLESTON, W.Va. -- American corporations using offshore addresses to avoid paying domestic taxes cost West Virginia $106 million last year, according to a national report released Wednesday.The report -- "The Hidden Cost of Offshore Tax havens: State Budgets Under Pressure from Tax Loophole Abuse" -- was prepared by the national nonprofit group United States Public Interest Research Group. The report was released locally by the West Virginia Citizen Action Group at the state Capitol on Wednesday."Tax dodging is not a victimless offense. When corporations skirt taxes, the public is stuck with the tab. And since offshore tax dodgers avoid both state and federal taxes, they hurt everyday taxpayers twice," said Dan Smith, PIRG's tax and budget advocate. "West Virginia should be using that money to benefit the public."
Gov. Earl Ray Tomblin has asked many state agencies to cut their budgets by 7.5 percent."Before politicians in Charleston and Washington cut critical education, health-care and public safety programs they need to first make sure that millionaires and big corporations pay their fair share of taxes," said Gary Zuckett, CAG's executive director."That means closing loopholes that allow them to hide income and profits in overseas tax havens where they dodge paying U.S. taxes," Zuckett said. Ted Boettner, executive director of the West Virginia Center on Budget & Policy, said West Virginia "collects less in corporate taxes last year than it did two decades ago. In 1990, the business franchise and corporate income taxes made up almost 13 percent of our general revenue fund. Today, they are less than 5 percent."Businesses receive great benefits from our collective investments in public structures -- including an educated workforce, basic infrastructure like roads, and police and fire protection -- and they need to pay their fair share," Boettner said.He said that in West Virginia, personal income taxes increased by 227 percent and consumer sales taxes rose by 161 percent between 1990 and 2011. During those same years, corporate net income and business franchise taxes dropped by 15 percent, according to the state Budget Office and the U.S. Census Bureau.
Last year, states across the country lost nearly $40 billion in taxes from offshore tax loopholes -- close to the amount spent by all state and local governments on firefighters in 2008, according to the PIRG report.Companies using offshore tax havens, PIRG reported, include Alcoa, American Express, Bank of America, IBM, ConocoPhillips, Dell Inc., ExxonMobil Corp., McDonald's, Sears, Apple, Cisco Systems, Kroger, Dow Chemical, DuPont, Ford Motor Co., General Motors Corp., Coca-Cola and FedEx.The federal Government Accountability Office reported that 83 of the top 100 publicly traded companies in the country used offshore tax havens in 2008.The PIRG report cited specific examples of tax loopholes, including:* Google cut its tax bills by $3.1 billion from 2008 to 2010, by using accounting techniques nicknamed the "Double Irish" and "Dutch Sandwich" -- two subsidiaries in Ireland and one in Bermuda.
* Wells Fargo paid no federal income taxes between 2008 and 2010, despite making profits in all three years, largely through using 58 offshore subsidiaries.* Microsoft avoided paying $4.5 billion in federal income taxes over three years by using accounting schemes that artificially shifted company funds to tax-friendly Puerto Rico. Microsoft sent 47 percent of all revenue generated by domestic sales to its Puerto Rican subsidiary.By the end of 2011, according to the U.S. Government Accountability Office, 290 of Fortune's top 500 companies reported they were holding $1.6 trillion in profits offshore, according to PIRG's new report."Working people don't have the means to invest in offshore tax havens. They barely make enough to survive. Average citizens are disenfranchised by our current tax law," said Kris Mallory, executive director of the American Federation of State County and Municipal Employees in West Virginia.Reach Paul J. Nyden at email@example.com or 304-348-5164.