It’s well known that American corporations use off-shore tax havens to shield their profits from taxation. However, a recent report by U.S. Public Interest Group (USPIRG) gives us new details on just how widespread the tactic is and, more importantly, the impact it is having on the funding of education across the country. According to their analysis, this practice reduces tax revenues in the USA by roughly $90 BILLION every year. In Michigan, the impact on education funding is a loss of over $687 million over the past four years.
Americans for Tax Fairness spelled it out in a recent statement:
According to numbers compiled by the National Education Association, over the last four years, Michigan has lost over $687 million in state dollars for education due to corporations not paying their fair share in taxes.
Tax loopholes encouraged 13 Michigan Fortune 500 companies – including Dow Chemical, General Motors, Stryker, Whirlpool, Ford Motors and Kellogg – to maintain a total of $54 billion in profits offshore in 2014, much of the money in tax havens, according to a report prepared by the U.S. Public Interest Group (USPIRG).
Frank Clemente, executive director of Americans for Tax Fairness, explains how much education money is at state in Michigan, saying, “Big U.S. multinational corporations have $2.1 trillion in profits that are offshore. They owe about $600 billion on those profits. That’s about 10 times the total federal education budget,” he said. “If Congress closed the corporate tax loopholes that are the low-hanging fruit, we could generate about $100 billion in revenue a year. That would translate into about $100 million extra for Michigan each year in federal education spending, according to data from the National Education Association.”
The problem with education funding in our state and across the country isn’t that there isn’t enough money. The problem is one of priorities. We can continue to allow corporate American to enrich their shareholders at the expense of educating our children or we can shift our priorities and begin compelling these companies to pay their fair share. Their short-term, profit-driven approach ignores the fact that a well-educated populace is better for everyone, including them and their bottom line. In other words, it’s not just the right thing to do as corporate citizens that benefit from American prosperity, it will enhance their prosperity over time.
Let’s finish with a statement from Linda Teeter, executive director of Michigan Citizen Action who leads the Americans for Tax Fairness campaign in Michigan:
As end of the year budget discussions continue to unfold in Washington, D.C., we are urging our elected officials to work to close offshore corporate tax loopholes so we can fund our priorities here at home. Corporations that take advantage of tax havens use Michigan roads, employ working people who were educated in our public schools and enjoy the security afforded to us by police and fire departments. But these same companies ultimately contribute very little to these public goods when they hide their profits overseas to purposely avoid paying taxes. We need to close these offshore loopholes, which is why Americans for Tax Fairness has been calling on Congress to act to force corporations to pay their fair share.