Tax Day 2013: This is How Much You'll Have to Make Up For Big Corporations
As the annual April 15 income tax deadline approaches, millions of taxpayers are begrudgingly preparing their tax returns to send off to the IRS. Many are convinced they are paying too much and confused about just what their hard-earned cash is paying for once it's pooled with millions of other contributions in the national coffers.
While taxes may never be popular, the benefits and services that they pay for are, since most of these are essential benefits and services that families, seniors and children depend on every day. These include Social Security, Medicare, Medicaid, veterans' benefits, science and medical research, education, and national security. All enjoy very broad and consistent public support. Americans might complain about paying taxes, but most of us couldn't imagine living in a country without roads, bridges, public schools and law enforcement nor do we want our elderly neighbors living in poverty, our kids growing up without learning how to read or our bridges falling down around us.
We might all think we're paying too much, but we still believe these critical investments should be a priority for the country. And, although we may not all realize it, we enjoy these amenities at a relatively lower cost compared to citizens of other developed countries.
In 2008, the U.S. taxes made up just 26% of our nation's GDP, compared with an average of 35% of GDP for the 33 member countries of the Organization for Economic Co-operation and Development (OECD). That means U.S. taxpayers won't pay lower taxes by moving to Canada, Europe, Japan or even Australia. Only Mexico, Chile and Turkey collected fewer taxes from its citizens than the U.S. during this period and it's not clear that many of us would flock to those shores notwithstanding the discount on taxes. For most taxpayers, escape is not that easy.
However, the same isn't true for many Wall Street corporations who routinely stash profits offshore in "tax havens" to avoid paying their taxes. Offshore tax abuses are estimated to cost the country more than $100 billion a year, draining money from the economy that would help pay for much needed investments in education, infrastructure and public safety without increasing the deficit. A recent report showed that 92 Fortune 500 corporations, including Apple, Microsoft, and General Electric, each boosted their reported offshore profit holdings by at least $500 million each, adding a total of $229 billion to their offshore profit hoards in 2012 alone.
Tax loopholes and special breaks that allow the rich and Wall Street to avoid paying their fair share of taxes don't just result in revenue loss; it carries an actual cost to consumers. New research released this week shows that the average American taxpayer pays more than $1,000 a year — and the average small business more than $3,000 a year — to make up for big corporations and high-income individuals that drain money from the economy by hiding money in off-shore tax haven to avoid paying taxes. So, not only do corporations end up paying less because of gaming the system, we end up paying more when they cheat the system.
Not only that, the cost of shifting burdens to states and families as a result of corporate tax dodging means that many of us are actually paying twice while the richest people and corporations are barely paying at all. That's because while we're following the rules and paying our annual income taxes, we're also facing cuts to education, health care, and other critical services in the community as a result of recent across the board cuts. We're paying more out of pocket to compensate for the services and benefits that get reduced since there isn't as much money in the federal budget to pay for them when the richest don't pay their fair share.
Like it or not, paying taxes on April 15 is part of what it means to be an American and most of us are going to do it because we play by the rules and we believe in our system. Corporations and millionaires that avoid paying aren't just dodging their taxes; they're dodging their fundamental responsibility to the rest of us and to the fundamental principle of fairness.