Tax Havens Cost Small Businesses in MA Plenty
BOSTON – When big companies avoid taxes by using offshore tax havens, small businesses are forced to pick up the slack for those lost revenues. A new national survey found that Massachusetts ranks fourth-highest in the nation for the impact of that additional burden on local businesses.
The report by the MASSPIRG Education Fund said the amount of money corporations book to offshore tax havens is growing. And According to MASSPIRG legislative director Deidre Cummings, that leaves small businesses in the Bay State picking up a big portion of the tab.
"In Massachusetts, the average small business pays an extra $5,845 to compensate for that money that big multinational companies are stashing offshore,” Cummings said.
Supporters of the tax loopholes say they would not be necessary if the U.S. would reduce the top tax rate. And President-elect Donald Trump has proposed cutting the top corporate tax rate to 15 percent.
But Cummings said that, in practice, most big corporations already pay less than that. She said multinational corporations and wealthy individuals avoid an additional $147 billion in federal and state taxes every year.
Trump has also proposed a one-time tax of 10 percent on money parked offshore to entice companies to bring that money back to the U.S. Cummings said these kinds of tax reforms need to be comprehensive and close loopholes to prevent future tax-haven abuse.
"Sure, this time we could do a discount or we could figure out different mechanisms to bring it back in,” Cummings said, "but it only helps the average taxpayer and the small business if we close that loophole door permanently."
Offshore tax havens allow big businesses to benefit from the nation's infrastructure without paying the taxes necessary to support it, Cummings said.
"Large multinational companies can thrive because we have security, we have roads and bridges,” she said; "and it's really not fair that the small businesses and the average taxpayer pays for that, and the large multinationals - who you could argue benefit the most - are avoiding that."
According to the report, small businesses in the District of Columbia shoulder the largest tax burden in the nation - more than $7,000 per year in extra federal and state taxes as a result of tax-haven abuse.