It was Tax Day in the United States on Tuesday—the deadline by which U.S. taxpayers must mail in their tax returns for the previous year’s income to the Internal Revenue Service (IRS). Thus, it was the perfect time to reflect on the taxes that are dodged each year by individuals and corporations at home and abroad. My colleague, Heather Lowe, and I wrote an op-ed for the Huffington Post drawing attention to this very topic.
Highlighting the fact that the U.S. loses an estimated $100 billion each year to tax haven abuses, and the fact that trade mis-pricing alone costs developing nation governments at least another $100 billion in lost tax revenue, Heather and I wrote:
The seriousness of the problem cannot be overstated: very often it is a matter of life and death. In the developing world, this means that children will go hungry, hospitals will not be funded, schools will not open and clean water will not be available to many people. In the developed world public services will be cut, roads and bridges will fall into disrepair, firefighters will be laid-off, and the middle class will be asked to pay more.
Tax dodging shifts the burden of public financing off the shoulders of multinational corporations and off the shoulders of the wealthy, increasing the tax burden on small and medium size enterprises as well as on middle and working class citizens.
But we are not helpless. We can pass into law the Stop Tax Haven Abuse Act which would require — among other things — all companies registered with the SEC to report data on employees, sales, financing, tax obligations and tax payments on a country-by-country basis, making it readily apparent to public observers which companies are abusing transfer pricing to avoid paying taxes in both developed and developing nations.
As the largest economy in the world, we could also demand that the G20 adopt a global system of automatic tax information exchange between jurisdictions, making it nearly impossible for wealthy tax evaders to hide behind tax haven secrecy laws in offshore locations.
Oliver Wendell Holmes once famously wrote that “taxes are the price we pay for a civilized society”—a notion implicitly acknowledged by each of us when we file our tax returns with the IRS every April. Yet civilized society, at home and abroad, is precariously at risk today unless we do something to stem the rampant tax dodging facilitated by tax havens.
You can read the full op-ed here on the Huffington Post’s website.
Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.