An extra $1,260 in taxes a year is a lot of money for most individuals to pay. But that’s what NJPIRG and NJ Citizen Action say it costs the average New Jerseyan each year in federal taxes due to multinational corporations and a few wealthy individuals using tax loopholes to shelter profits offshore. A report written by NJPIRG says that New Jersey small business are impacted even more severely, costing them $3,941 in extra federal taxes per year.
The report says that tax-haven abuse costs the federal government about $150 billion a year, with 83 of the largest publicly traded U.S. corporations sheltering profits in tax haven countries. They cited Pfizer, as well as Microsoft, Google, and Bank of America as companies taking advantage of tax loopholes. For example, according to the report, Pfizer makes 40 percent of its sales in the U.S. but reported no taxable income in the U.S. for the past five years.
One of the more interesting segments in the report explains the tactics that companies use to avoid taxes. For instance, some U.S. companies transfer intellectual property rights to companies in tax-haven companies, and then pay inflated fees to use them in the United States. They also shift income to foreign subsidiaries in order to place that money in American financial institutions without it being considered repatriated and thus taxable.