Multinational companies use tax havens to avoid $37 billion in taxes -- money that could be spent on a small business lending fund.
Gimme Shelter: A group of small business advocates is taking aim at corporations that avoid taxes by setting up shop in tax havens such as the Cayman Islands (pictured).
Hundreds of small businesses have joined the fight against offshore tax havens that they believe are bad for business.
Senator Carl Levin, a Michigan Democrat, is backing the campaign, officially called Business and Investors Against Tax Abuse and to be launched today. The group, which says the abusive shelters cost taxpayers as much as $123 billion a year, will today release a report showing that use of tax shelters has mushroomed. According to the New York Times, the 25-page report claims that American multinational corporations use the havens to avoid $37 billion in federal taxes each year, a figure three big nonprofit campaign supporters (the American Sustainable Business Council, Business for Shared Prosperity and Wealth for the Common Good) call conservative.
"This $37 billion could be used to fund initiatives to support America's small businesses — the nation's biggest job creators — by increasing their access to capital, increasing their opportunities to invest and rewarding entrepreneurship," the report says, according to the New York Times. With that money, the report says, "we could establish a $30 billion Small Business Lending Fund to provide capital investments to small community banks (those with less than $10 billion in assets) to increase lending to small enterprises."
Levin said in a statement that the campaign "represents the first time in recent years that business people who believe tax havens are bad for business are mobilizing publicly to end the abuse."
Last year Levin – who chairs the Senate Permanent Committee on Investigations – introduced the Stop Tax Haven Abuse Act. The bill's targets: Offshore tax abuses it was then claimed hid some $100 billion from the Treasury. Levin and then-Senator Barack Obama introduced similar legislation in 2007. Neither bill made it through the Senate Finance Committee.
The U.S. loses $60 billion in tax revenue thanks to companies' international income shifting, according to a study published in December in the National Tax Journal. Bloomberg estimated American companies amassed at least $1 trillion in foreign profits not taxed in the U.S. as of the end of last year. The total – based on filings by 135 companies – increased 70 percent over three years, up from $590 billion in 2006.
Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.