Each small business would need to pay an average of $3,244 in additional taxes if they were to pick up the full tab for income lost to corporations exploiting tax havens.
Connecticut should act to close loopholes that allow big corporations to pay less tax. That’s the recommendation of pressure group ConnPIRG, which says small businesses in the state pay thousands of dollars extra each year to make up for corporate tax avoidance.
Large multinational corporations use a variety of perfectly legal means to minimize their tax bills, but ConnPIRG’s new report points out that the practice ends up costing the rest of us.
“Companies should pay the taxes that we all agree to through our political process,” said ConnPIRG director Evan Preston.
According to the group, if you total up the full amount of tax that Connecticut based corporations avoid, small businesses here — the ones that can’t take advantage of a Cayman Islands address, or employ an army of accountants to find tax loopholes — could end up paying an additional $7,000 a year each to make up the difference.
That places Connecticut seventh on a ranking of all 50 states. Nationally the average additional tax for a small business, were they to pick up the corporate tab, is $3,244.
And not all of it is federal tax. “Connecticut has control over about a fifth of that overall amount, to close the loophole and act, regardless of what happens in Congress,” Preston told WNPR. While the biggest effect would come from action by the federal government to end corporate loopholes, ConnPIRG is urging the states to take the lead.
"Just recently my colleagues in Oregon helped pass a bill that is bringing back tens of millions of dollars every budget cycle to Oregon by closing the tax loopholes that were being used to house profits out of state," Preston said.
The report names corporate names, among them Pfizer, which it said paid no U.S. tax between 2010 and 2012, and in fact received federal tax refunds, while harboring $74 billion in profits offshore.
Fairfield-based General Electric maintains 18 tax haven subsidiaries, according to the study.
The report puts the total loss to the U.S. and state treasuries from corporate tax avoidance at $110 billion a year.
