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Taxpayers pay extra due to offshore taxes

The Massachusetts Public Interest Research Group released a report April 4, which revealed that Mass. taxpayers are forced to make up revenue lost due to offshore tax havens by wealthy individuals and corporations.

In 2012 as a result of tax dodging, the average taxpayer in Massachusetts had to pay an extra $1,542, according to the MASSPIRG report. Offshore tax dodging costs the Commonwealth $1.6 billion annually, which would be enough to double the operating budget of the Massachusetts Bay Transportation Authority, according to the report.

“Tax dodging is not a victimless offense,” said Deirdre Cummings, legislative director of MASSPIRG, in a press release Thursday. “When companies use accounting gimmicks to move their profits to tax haven shell companies, the rest of us have to pick up the tab. With the nation facing such serious budget challenges, it’s a no-brainer that we need to close these loopholes and stop letting large corporations avoid paying what they should.”

The Pfizer pharmaceutical company, for example, has not reported any taxable income in the last five years in the U.S., but has $73 billion stored in offshore havens, according to the MASSPIRG report. To shoulder the cost, small businesses are forced to pay an average of $3,067 in additional taxes, the report stated.

Alex Zaroulis, director of communications for the Massachusetts Executive Office of Administration and Finance, said the problems couldn’t be stopped on a state level, as it is federal tax law.

“This deals with federal law, not state law. There is not a lot that we can do legislatively right now,” Zaroulis said.

While there is not a lot that can be done on the state level, Cummings said there are two bills in Congress that will deal with the problem on a federal level.

“That’s [the two bills] probably the more holistic approach,” she said. “Closing tax loopholes is a no-brainer. So, that should be the first step and there is an opportunity now as Congress is really focused on resolving the budget crisis that we are currently in.”

Cummings said there is a good chance the bills — called the “Cut Unjustified Tax Loopholes Act” and the “Stop Tax Haven Abuse Act,” respectively — will pass because it is an easy bipartisan decision.

“It would allow Democrats and Republicans to get together on an issue that is neither raising taxes nor cutting programs,” she said. “And it seems silly to me that we don’t go first after the loopholes closing and let big companies off the hook for paying for the services that taxes provide.”

U.S. Rep. Michael Capuano of Massachusetts co-sponsored the Stop Tax Haven Abuse Act, according to the release.

“It’s long past time to close the loopholes that allow large corporations to reduce their tax obligations,” Capuano in a release April 4. “The use of these tax havens means that there is less money available for crucial state and national needs, from education to infrastructure improvements.”

Andrew Stenger, 25, a resident of Boston, said he agrees it is time for the legislation to change.

“I knew people cheated on their taxes illegally, but using loopholes doesn’t make it illegal,” he said. “It’s just a way for people to cheat legally, and that’s not fair to the rest of us who have to pay, not just our share, but everyone else’s too”

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