Tax

Some U.S.-based multinational firms and individuals avoid paying U.S. taxes by using accounting tricks to shift profits made in America to offshore tax havens—countries with minimal or no taxes. They benefit from their access to America’s markets, workforce, infrastructure and security; but they pay little or nothing for it—violating the basic fairness of the tax system and forcing other taxpayers to pick up the tab.

Every year, state governments spend tens of billions of dollars through contracts with private entities for goods and services, subsidies to encourage economic development, grants, and other forms of spending. Accountability and public scrutiny are necessary to ensure that state funds are well spent. 

In recent years, state governments across the country have created transparency websites that provide checkbook-level information on government spending – meaning that users can view the payments made to individual companies and details about the goods or services purchased. These websites allow residents and watchdog groups to ensure that taxpayers get their money’s worth from deals the state makes with companies.

In 2013, for the first time, all 50 states provide some checkbook-level information on state spending via the Internet. In 48 states – all except California and Vermont – this information is now searchable. Just four years ago, only 32 states provided checkbook-level information on state spending online, and only 29 states provided that information in searchable form.

This report, WashPIRG Education Fund’s fourth annual evaluation of state transparency websites, finds that states are closer than ever before to meeting the standards of “Transparency 2.0” – encompassing, one-stop, one-click checkbook transparency and accountability. Over the past year, new states have opened the books on public spending and several states have pioneered new tools to further expand citizens’ access to critical spending information. Many states, however, still have a long way to go to provide taxpayers with the information they need to ensure that government is spending their money effectively.
 

When U.S. corporations and wealthy individuals use offshore tax havens to avoid paying taxes to the federal government, it is an abuse of our tax system. Tax haven abusers benefit from our markets, infrastructure, educated workforce, and security, but they pay next to nothing for these benefits. Ultimately, taxpayers must pick up the tab, either in the form of higher taxes, cuts to public spending priorities, or increased national debt.

Many corporations and wealthy individuals use offshore tax havens—countries with minimal or no taxes—to avoid paying $150 billion in U.S. taxes each year.

Companies that do business in the U.S. but use offshore tax havens to avoid taxes—such as Microsoft, Exxon Mobil, and Bank of America— benefit from their access to America’s markets, workforce, infrastructure and security. Shirking the taxes that pay for these benefits violates the basic fairness of the tax system. By shielding their income from U.S. taxes, corporations and wealthy individuals shift the tax burden to ordinary Americans, who must pick up the tab in the form of cuts to public services, more debt, or higher taxes.

The $150 billion lost annually to offshore tax havens is a lot of money, especially at a time of difficult budget choices.