Chicago - Feb. 16, 2019
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Illinois Could Recover $1.3 Billion Lost To Corporate Tax Loopholes

Every year, corporations use complicated schemes to shift U.S. earnings to subsidiaries in offshore tax havens which helps them dodge both state and federal taxes. Reforms to end tax dodging in Illinois would reduce revenue loss by $1.3 billion, according to a new report called "A Simple Fix for a $17 Billion Loophole," released Tuesday by the Illinois PIRG Education Fund.

"When multinational businesses dodge millions in Illinois taxes, that money doesn't come out of a hat. It means either means we have less money for public priorities like education or other taxpayers end up footing the bill," said Abe Scarr, Illinois PIRG Education Fund director. "Luckily, there are ways for Illinois to even the playing field, and recover more than $1.3 billion for critical services without raising rates."

"A rational public budget has to start with the revenue base," said Ralph Martire, executive director of the Center for Tax and Budget Accountability. "This report shows how leaving important parts of the economy out of that base both makes government more regressive and makes it harder to support core public services. Fixing that should be a top priority."

For years, some corporations that do business in Illinois have dodged taxes by booking profits made in America to tax havens like the Cayman Islands, that levy little to no tax. The report, which was co-authored by Illinois PIRG Education Fund, the Institute on Taxation and Economic Policy, SalesFactor.org and the American Sustainable Business Council, looks at approaches Illinois can take to address this offshore tax dodging.

States have the power to use a global picture of a company's activities in order to determine how many tax dollars a state rightfully should receive. A Simple Fix details how much money each state would recover if it required companies to follow one or more standard procedures, including domestic combined reporting, tax haven list reform and worldwide combined reporting - otherwise known as complete reporting.

Combined reporting (used already by 27 states and Washington, DC, including Illinois) applies a formula to the total domestic business of a company to determine how much income a company should attribute to the state, instead of letting the company decide unilaterally how to allocate its profits (which incentivizes shifting money to low-tax jurisdictions).

Complete reporting expands the combined reporting to include the company's entire global business in order to close loopholes that allow corporations to hide profits offshore.

"Right now, responsible businesses pay their fair share of taxes, while others are allowed to dodge and avoid their fair share. That hurts everyone," said John O'Neill of the American Sustainable Business Council, which has a member network representing 250,000 businesses. "Too many companies have abandoned their moral obligation to pay the full amount they owe for the public services and infrastructure they use in our states. That means other taxpayers, including other businesses, have to pay more."

Closing loopholes that allow offshore tax dodging would lead to significant revenue gains for most states, totaling $17 billion across the country, as illustrated in the table below. By modernizing state tax codes with these simple reforms, Illinois would bring in $1.3 billion each year, level the playing field for local businesses that compete with multinational corporations, and protect honest taxpayers from picking up the tab for tax dodgers.

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Previously in tax scammage:

* McDonald's Breaks Promise To Raise Wages.

* Last Year, Amazon Paid No Federal Income Taxes. Now, It's Trying To Kill A Local Tax That Aims To Help the Homeless.

* Trump Vowed To Punish Companies That Moved Jobs Overseas. Is Congress Rewarding Them?

* After Long Career Bailing Out Big Banks, Obama Treasury Secretary Tim Geithner Now Runs Predatory Firm That Exploits The Poor For Profit.

* Jeff Bezos Just Became The Richest Person Ever. Amazon Workers Just Marked #PrimeDay With Strikes Against Low Pay And Brutal Conditions.

* A Sweet New Century For America's Most Privileged.

* With Nation Transfixed By Kavanaugh Monstrosity, House GOP Votes To Give Rich Another $3 Trillion In Tax Cuts.

* Deepwater Horizon Settlement Comes With $5.35 Billion Tax Windfall.

* Offshoring By 29 Companies Costs Illinois $1.2 Billion Annually.

* Government Agencies Allow Corporations To Write Off Billions In Federal Settlements.

* The Gang Of 62 Vs. The World.

* How The Maker Of TurboTax Fought Free, Simple Tax Filing.

* $1.4 Trillion: Oxfam Exposes The Great Offshore Tax Scam Of U.S. Companies.

* How Barclay's Turned A $10 Billion Profit Into A Tax Loss.

* Wall Street Stock Loans Drain $1 Billion A Year From German Taxpayers.

* German Finance Minister Cries Foul Over Tax Avoidance Deals.

* Prosecutor Targets Commerzbank For Deals That Dodge German Taxes.

* A Schlupfloch Here, A Schlupfloch There. Now It's Real Money.

* How Milwaukee Landlords Avoid Taxes.

* Study: 32 Illinois Fortune 500 Companies Holding At Least $147 Billion Offshore.

* Watch Out For The Coming Tax Break Trickery.

* When A 'Tax Bonanza' Is Actually A Huge Corporate Tax Break.

* The Hypocrisy Of Corporate Welfare: It's Bigger Than Trump.

* Oxfam Names World's Worst Tax Havens Fueling 'Global Race To Bottom.'

* Offshore Tax Havens Cost Average Illinois Small Business $5,789 A Year.

* State Tax Incentives To Corporations Don't Work.

* GOP Tax Plan Would Give 15 Of America's Largest Corporations A $236 Billion Tax Cut.

* Triumph Of The Oligarchs.

* Amazon Short-List Proves Something "Deeply Wrong" With America's Race-To-The-Bottom Economy.

* Apple's $38 Billion Tax Payment Less Than Half Of $79 Billion They Owe.

* U.S. Surpasses Cayman Islands To Become Second-Largest Tax Haven On Earth.

* Less Than Year After GOP Tax Scam, Six Biggest Banks Already Raked In $9 Billion In Extra Profits.

* After Budget Cuts, The IRS's Work Against Tax Cheats Is Facing "Collapse."

* $6.5 Billion: A Low-Ball Estimate Of The Walton Family's Haul After 16 Years Of Bush, Obama And Trump Tax Giveaways.

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Previously in The Paradise Papers:

* 'Paradise Papers' Reveal Tax Avoidance, Shady Dealings Of World's Rich And Powerful.

* Just How Much Money Is Held Offshore? Hint: A SHIT-TON.

* Development Dreams Lost In The Offshore World.

* Keeping Offshore 'Hush Hush,' But Why?

* Tax Havens Are Alive With The Sound Of Music.

* Today In Tax Avoidance Of The Ultra-Wealthy.

* Go To Town With This Offshore Leaks Database.

* The Paradise Papers: The View From Africa And Asia.

* The Paradise Papers: The End Of Elusion For PokerStars.

* The Paradise Papers: An Odd Call From The Bermuda Government.

* The Paradise Papers: Nevis Is An Offshore Haven Of Opportunity

* The Paradise Papers: The Long Twilight Struggle Against Offshore Secrecy.

* The Paradise Papers: A Fair Tax System Will Be Lost Without Public Pressure.

* Item: Today In The Paradise Papers: Through Death Threats And Scare Tactics, Honduran Reporter 'Perseveres.'

* The Paradise Papers: Journalists Flee Venezuela To Publish Investigation.

* Last Stop: Chicago.

* The Paradise Papers: 'Africa's Satellite' Avoided Millions Using A Very African Tax Scheme.

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Previously in The Panama Papers:

* The Panama Papers: Remarkable Global Media Collaboration Cracks Walls Of Offshore Tax Haven Secrecy.

* The Panama Papers: Prosecutors Open Probes.

* The [Monday] Papers.

* Adventures In Tax Avoidance.

* Mossack Fonseca's Oligarchs, Dictators And Corrupt White-Collar Businessmen.

* Jonathan Pie, TV Reporter! They're All In It Together.

* Meet The Panama Papers Editor Who Handled 376 Reporters In 80 Countries.

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Previously in carried interest, aka The Billionaire's Loophole:

* Patriotic Millionaires Vs. Carried Interest.

* The Somewhat Surreal Politics Of A Private Equity Tax Loophole Costing Us Billions (That Obama Refused To Close Despite Pledging To Do So).

* Fact-Checking Trump & Clinton On The Billionaire's Tax Break.

* Despite Trump Campaign Promise, Billionaires' Tax Loophole Survives Again.

* Carried Interest Reform Is a Sham.

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Comments welcome.



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Posted on January 16, 2019


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