by Jordan Schneider
In the years since 2008, cash-strapped state governments have had to make painful cuts in education, police, fire, and other critical public services to balance their budgets. While our depressed economy is partly to blame, tax dodging by large U.S. multinational corporations also contributes significantly to the problem.
Our new report, The Hidden Cost of Offshore Tax Havens, reveals that states lose billions of dollars in tax revenues each year when large companies and wealthy individuals use offshore tax havens to avoid reporting profits for federal tax purposes. State and federal tax codes are closely linked, so income not reported to the federal government isn’t reported to states either, resulting in automatic, billion-dollar revenue losses.
The magnitude of the losses has attracted media coverage from more than 50 outlets across the country since the report release on February 5, including Bloomberg Businessweek, Boston Globe, Chicago Tribune, Minneapolis Star Tribune, New Jersey Star Ledger, San Francisco Chronicle, Atlanta Business Journal, Portland Business Journal, Roll Call, The Hill, Governing Magazine, and The Fiscal Times.
The good news is that states do not have to wait for a deadlocked Congress to act to protect themselves against some of these losses. We urge all state to pursue the policy tools we’ve outlined in our report to reduce the impact of offshore tax haven abuse on their budgets. Read the report here.