New Report – Unfair Advantage: The Business Case Against Tax Havens

Business Against Tax Havens, American Sustainable Business Council, Business for Shared Prosperity and Wealth for the Common Good, July 2010.

Download the report.

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We, the undersigned business owners, executives and investors, call on the President and Congress to end tax dodging and support a level playing field for business by enacting strong legislation to stop tax haven abuses. Offshore tax havens reward tax evaders, rob public coffers of needed revenue and offload taxes to responsible businesses and households.

Everyone needs to pay their fair share to keep America moving forward. Tax dodging deprives our nation of revenue needed to maintain and modernize the infrastructure and services underpinning a strong economy. An estimated $100 billion or more in tax revenue is lost every year to tax havens. Our economic progress is undermined when companies are rewarded for financial manipulation rather than innovation and productive investment.

Responsible businesses and banks are hurt when other firms use tax havens to avoid paying their fair share of taxes. In using tax havens, companies like Best Buy and Citigroup, for example, shift their responsibility for taxes to the local appliance store or community bank.

There is no justification for tax avoidance and evasion through tax havens. Offshore tax havens provide cover for banks, hedge funds and corporations to shift taxable income from the United States for the sole purpose of escaping taxation. Tax haven secrecy allows wealthy Americans to hide assets, helps companies manipulate their finances, and fosters the casino economy. McClatchy News reported, for example, how working through Cayman Island subsidiaries, Goldman Sachs “peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst.”

Eighty-three of the 100 largest publicly traded U.S. corporations and 63 of the 100 largest publicly traded federal contractors had subsidiaries in the Cayman Islands, Bermuda, Switzerland, Luxembourg and other offshore tax havens in 2007, according to the latest report from the US Government Accountability Office. These included oil companies, defense contractors, health insurers, retailers, pharmaceutical companies, and failed or bailed out banks such as:

Citigroup: 427 tax haven subsidiaries ~ Morgan Stanley: 273 ~ Bank of America: 115 ~ Wachovia: 59 ~ Lehman Brothers: 57 ~ JP Morgan Chase: 50 ~ Goldman Sachs: 29 ~ Merrill Lynch: 21 ~ American International Group (AIG): 18 ~ Countrywide Financial: 7 ~ News Corp: 152 ~ Procter & Gamble: 83 ~ Pfizer: 80 ~ Oracle: 77 ~ Marathon Oil: 76 ~ PepsiCo: 70 ~ Caterpillar: 49 ~ Merck: 44 ~ Boeing: 38 ~ Dow Chemical: 35 ~ Fluor Corp: 34 ~ Exxon Mobil: 32 ~ UnitedHealth Group: 11 ~Best Buy: 12 ~ Target: 8.

Ending tax haven abuse shows we are serious about taxation that is transparent, fair and responsible. It is an important step in ending the irresponsible speculation and financial manipulation putting our whole economy at risk. We call on Congress and the President to strengthen our economy by enacting tough legislation to stop tax haven abuses.*

Sign the petition.

Key provisions we support include:

End the tax dodging that occurs when a business incorporates in a tax haven, pretending to be a foreign corporation for U.S. tax purposes while, in reality, being managed and controlled from the United States, and taking advantage of all the commercial, educational and other infrastructure financed by U.S. taxpayers.

End financial gimmickry that allows hedge funds to engage in transactions designed for the sole purpose of avoiding taxes on dividends.

Put the “economic substance doctrine,” eliminating tax benefits for transactions that have no real business purpose apart from avoiding taxes, in the Internal Revenue Code.

Impose restrictions on foreign jurisdictions, financial institutions or international transactions that are of primary money laundering concern or that impede U.S. tax enforcement.

Increase disclosure of offshore accounts and close foreign trust, equity swap and other loopholes used to avoid or evade taxes.

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