Offshore Tax Havens Cost State $814M

Budget woes at the state and federal level have some revisiting the use of offshore tax havens by companies. A consumer advocacy group estimates the state missed out on $814 million of revenue last year because of this practice.

A number of companies that do business in the U.S. keep their profits elsewhere. The Government Accountability Office says in 2008, 83 of the largest 100 publicly traded corporations shifted earnings to countries with little or no tax liability. The Wisconsin Public Research Interest Group (WISPIRG) says this tax loophole is one reason state budgets are under pressure. The group’s Joe Rasmussen says that with Congress gridlocked, state lawmakers have to act to make sure corporations are paying their fair share.

“What the state could do is essentially improve its own reporting requirements, disclosure and transparency requirements, decouple that reporting from the federal tax code to require separate reporting to the state so that those revenues would become clear.”

Rasmussen says WISPIRG is working with state lawmakers to get a firm number on how much Wisconsin is losing in taxes when U.S. companies shift earnings offshore.

“The conversation about what to do about our tax code about our budget challenges both at the state and federal level we feel like has risen to the forefront now more than ever.”

Rassmussen says the amount Wisconsin is estimated to have lost from corporations using tax havens could benefit the state. For instance, the group says $814 million would double the size of Governor Walker’s proposed tax cut, or be enough to hire 12,000 additional public school teachers.