Happy tax day! If that didn't bring a smile to your entrepreneurial face (and if it does you might have something to worry about), the following is unlikely to. A new analysis by U.S. PIRG suggests that offshore tax havens and tax-avoidance strategies for large corporations come at an annual hefty price of $150 billion.
That price comes about through a combination of factors: excess reliance on other tax payers like average individuals and small companies, cuts in public services, and increased public debt. If the loss was spread across all small businesses with fewer than 100 employees, it would come to $3,244 per firm every year.
The $110 billion figure is a few years old and a "conservative estimate" from a subcommittee report Senate, according to Jaimie Woo, a tax and budget advocate for U.S. PIRG, who spoke with me about the report. It's the result of taxes that the federal and state governments don't get to collect. However, the group used the statutory 35 percent as the federal corporate tax rate to estimate the unpaid amounts rather than the realized 30.5 percent companies pay that its analysis last year used.
"Companies are still using offshore tax havens very prevalently. It could very well be much larger now," she said.
The group's argument is that the loss of tax revenue must be made up in a combination of ways: deficit spending, reduced public services, and higher tax burdens on individuals and small businesses.
To get the figure of how much the amount would be if spread only as an additional tax bill to small businesses, U.S. PIRG took the $150 billion figure and divided it by the 33,537,500 small businesses with fewer than 100 employees that the IRS says exist.
"When large multinationals shirk their taxes, the rest of us have to pick up the tab," Woo said. "At the end of the day, our tax system is rigged against small business owners and average tax payers."
But then, as a business owner, chances are that you already suspected as much.
Fixing the problem would likely require the closing of some complex tax loopholes that are popular among large multinationals.