Thanks to big companies’ offshore tax havens, small businesses have to pay thousands in extra taxes.
Small businesses can’t catch a tax break.
Due to large corporations’ offshore tax havens, and the revenue lost because of their use, small businesses are burdened with paying an extra $5,128 a year in taxes on average, according to a U.S. Public Interest Research Group Education Fund report.
JOIN YOUR FELLOW BUSINESS OWNERS IN EASING THE TAX BURDEN.
The responsibility of making up for lost revenue shouldn’t fall on the small businesses, mainly because these owners aren’t the ones at fault, according to the report.
“The amount of cash corporations book to offshore tax havens is only growing, and it’s not because these businesses are conducting prolific amounts of business in the Cayman Islands,” said Alexandria Robins, U.S. PIRG tax and budget associate. “Our tax code is balanced in favor of big multinational corporations, and that means here at home we’re losing out on lower tax rates, more funding for public programs, or cuts to our national debt.”
In short, “the federal government loses $128.5 billion in corporate tax revenue due to tax haven abuse,” meaning small businesses would have to pay “an additional $4,481 in federal taxes [a year] to account for the revenue lost,” according to Accounting Today.
“On top of that, offshore tax havens cost state governments an estimated $18.5 billion in lost tax revenue, according to the report. U.S. small businesses would need to pay an average of an extra $647 to make up for the lost state tax revenue,” Accounting Today reports.
This amounts to the $5,128 small businesses pay in taxes a year.
Numerous corporations partake in offshore tax havens, but the three companies with the biggest havens are:
- General Electric: 20 tax haven subsidiaries, $104 billion offshore
- Microsoft: Five tax haven subsidiaries, $124 billion offshore
- Pfizer: 181 tax haven subsidiaries, $193.6 billion offshore
The report suggests closing offshore tax loopholes, as well as implementing reforms that are included in the Stop Tax Haven Abuse Act or ones that are already in the books in places like Montana and Oregon. Following these steps could save states $1 billion annually collectively, according to U.S. PIRG.
Related:
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