Paradise Papers Underscore Why Lawmakers Should Focus on Offshore Tax Avoidance
news releaseFollowing is a statement by Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, regarding the release of the “Paradise Papers,” a series of documents from Appleby, a leading offshore law firm. The International Consortium of Investigative Journalists released the investigative report today.
“As with last year’s Panama Papers, these papers will help shed light on the astonishing breadth of corruption facilitated by tax havens and law firms that work with elite clients and corporations.
“We already know from public disclosures a few details about the tax avoidance schemes cooked up by the likes of Apple and Nike, but the details of these companies’ offshore operations are usually shrouded in secrecy. These papers may help the public learn more about how some corporations use tax havens to facilitate rampant tax avoidance.
“Congress has the power to crack down on offshore tax avoidance. There are copious loopholes in our federal tax code that essentially incentivize companies to cook the books and make U.S. profits appear to be earned offshore. The House tax bill introduced late last week does nothing to close these loopholes.
“House leaders proposed substantially lowering the overall corporate tax rate from 35 to 20 percent and giving corporations what can only be considered a super-low, fire sale tax rate of 5 to 12 percent on their offshore cash. The bill does not close the most egregious loopholes that encourage corporations to move or keep profits offshore to avoid U.S. taxes. At the very least, lawmakers should have a formal debate about the implication of these papers and what they say about the tax-paying habits of corporations. At best, lawmakers should not reward bad corporate behavior by substantially lowering the statutory corporate tax rate and maintaining the loopholes that enable tax avoidance.”
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Resources:
House Tax Plan Would Make Offshore Tax Avoidance Substantially Worse: Blog post on international provisions of the Tax Cuts and Jobs Act.
Offshore Shell Games 2017: Our comprehensive report on offshore tax avoidance, tax haven abuse, and the $2.6 trillion in earning the Fortune 500 book offshore.
What you need to know about key companies cited in the papers: Apple Fact Sheet, Nike Fact Sheet, and Facebook Fact Sheet
New Report: American Corporations Tell IRS that 61 Percent of Their Offshore Profits Are in 10 Tax Havens