10 States Losing the Most Money From Offshore Tax Havens
The U.S. tax code is perhaps the most notorious welfare program available to large corporations. Each year, all-star teams of lawyers and accountants use loopholes and gimmicks to legally reduce tax liabilities for Corporate America. Discussions about tax havens typically focus on how they impact federal revenue, but states are also feeling the effects of an overly-complicated tax code.
States across the country could potentially save billions of dollars from a simple reform that targets offshore tax dodging, according to a new report from the U.S. Public Interest Research Group. In 2011, offshore tax havens cost states an estimated total of 20.7 billion in corporate tax revenue. In fact, 31 states missed out on $100 million in estimated revenues that year.
“While states struggled with budget problems, they collectively lost $20 billion as a result of the abuse of offshore tax loopholes,” said U.S. PIRG Tax and Budget Advocate and report co-author Dan Smith. “States need not wait for action in Washington. By modernizing their tax codes with this simple reform, states can curb incentives for moving business offshore, level the playing field for small businesses that compete with multinational corporations, and protect regular taxpayers from picking up the tab for tax dodgers.”
Montana and Oregon have already passed laws to collect taxes on income booked to known tax havens by mandating corporations include their domestic profits held in offshore tax havens when calculating taxes, but they are the only two states to close such loopholes. Overall, the amount of corporate money from around the world booked in offshore tax havens is nearly $2 trillion. Here’s a look at the 10 states that are losing the most revenue from offshore tax havens, according to U.S. PIRG.
10. North Carolina
Tax Revenue Losses: $494 million
9. Maryland
Tax Revenue Losses: $547 million
8. Florida
Tax Revenue Losses: $777 million
7. Massachusetts
Tax Revenue Losses: $991 million
6. Minnesota
Tax Revenue Losses: $1.05 billion
5. New Jersey
Tax Revenue Losses: $1.40 billion
4. Pennsylvania
Tax Revenue Losses: $1.41 billion
3. Illinois
Tax Revenue Losses: $1.54 billion
2. New York
Tax Revenue Losses: $1.93 billion
1. California
Tax Revenue Losses: $3.34 billion
Credit: Wall St. Cheat Sheet
