Study Finds Wisconsin Loses $29M Annually To Offshore Tax Loophole

A new study shows Wisconsin is losing out on nearly $29 million each year in tax revenue because of an offshore tax loophole.

It’s called the “water’s edge” loophole because American companies can park their money in foreign countries, said Bruce Speight, director of WISPIRG, the Wisconsin Public Interest Research Group.

“Like Barbados, the Bahamas, British Virgin Islands, the Cayman Islands, also Belize, Costa Rica, Hong Kong, Singapore,” Speight said: “It’s countries all over the world that are listed as various tax haven countries.”

WISPIRG did the study, which shows Wisconsin loses out on $28.8 million in tax revenue each year.

In March, a bill was introduced in the state Legislature that would have closed the loophole, but there wasn’t enough time in the session to address the measure.

Speight says the loophole is currently legal. He says the proposed legislation would force big companies who can afford accountants to play by the same rules that smaller companies follow.

“It levels the playing field for all taxpayers to make sure we’re all playing by the same rules,” Speight said. “Most importantly, it doesn’t stick the rest of us with picking up the tab for those who can exploit the tax code to their benefit.”

Montana and Oregon have already passed legislation that shuts off the so-called “water’s edge” loophole.