Tax Havens Drain US Coffers

February 7, 2013 Tax HavensTaxation in USA

Help on the way for Area I taxpayersBOSTON – State governments in the USA are losing nearly USD 40 billion a year in tax revenues due to tax evasion committed by wealthy individuals and multinational corporations in the country.

Against a backdrop of tightening budgets, spending  cuts and the threat of tax hikes the US Public Interest Research Group (PIRG) released a new report on February 5th detailing the extent of the tax revenues lost each year by state tax departments in the USA due to tax evasion committed by businesses and individuals by hiding incomes and assets in offshore companies and financial institutions.

According to the PIRG, in 2011 tax evasion committed by multinational businesses registered in the USA accounted for nearly USD 26 billion of lost revenues, and tax evasion committed by individual US taxpayers  cost an additional USD 13.8 billion.

Amongst all of the states of the US, California lost the most revenues to tax evasion, with nearly USD 7.15 billion in missed revenues, while New York and New Jersey were second and third, loosing USD 4.28 billion and USD 2.83 billion respectively.

The PIRG suggested several measures aimed at addressing the problem of tax evasion, including requiring individuals and companies to report their incomes to state tax authorities and not only the IRS, and mandating that companies which operate internationally must disclose the total worldwide income of their subsidiaries.

Photo by U.S. Army Korea (Historical Image Archive)