Table of Contents
Wealthy individuals and massive corporations often use tax havens as a way to evade paying their monetary dues to their country.
Taxes make up most, if not all, of a government’s ‘income’ or ‘revenue.’ That money goes to running the government (e.g. employee salaries), as well as funding everything it provides (e.g. social services and programs, infrastructure, and so on). Therefore, when massive corporations and individuals in the 0.1% deposit their profits in tax havens, their nation’s government loses out on billions, limiting its ability to provide proper services to citizens.
The public at large loses out. To the tune of hundreds of billions per year potentially.
DID YOU KNOW?
According to USA Facts, the amount of income held overseas by U.S. individuals and businesses was around $2.7 trillion in 2014. That’s the annual budget of about seven to nine government agencies combined ($300-$400 billion each).
Key Questions
The Zero Theft Movement works to eradicate the rigged layer of the economy. You and your fellow citizens take charge by (1) proposing, with proof, potential areas of theft by crony capitalists and how much is being stolen and (2) voting on whether you believe the proposed area is actually rigged and the amount stolen is accurate.
- What is a tax haven?
- How much of U.S. income is being held offshore?
- Who or what entities use tax havens?
- Have regulatory agencies or the government investigated tax avoidance?
- Is using a tax haven theft?
One of the major issues the public faces is the regulatory capture of Congress. Big corporations can essentially pay to influence legislation and regulation in order to unethically profit off the American public.
Don’t believe us? See what your fellow citizens think…
What is a Tax Haven?
DEFINITION
A tax haven typically refers to an offshore country that offers foreign individuals and companies little or no tax liability in a politically and economically stable environment. Beyond those benefits, tax havens also disclose limited or no financial information with foreign tax regulators (e.g. Organization of Economic Cooperation and Development (OECD) and the Government Accountability Office (GAO)) and do not require residency or business presence.
Individuals and businesses do not always have to look offshore to evade paying/reduce taxes, however. Intranational (within your country) tax havens can exist if cities and/or states have special tax laws. In the U.S., for example, Nevada requires no state income tax.
Offshore tax havens, too, stand to benefit from their status. Foreign individuals and companies are injecting capital into these countries, expanding opportunities for local banks, financial institutions, and other investment vehicles. Bermuda and the Cayman Islands are just two of the well-known offshore tax havens.
Offshore Untaxed Income by the U.S. Individuals and Companies
The Internal Revenue Service (IRS) released a tax estimate in 2016, claiming 81.7% of the owed taxes for 2008-2010 had been voluntarily and timely paid. The 18.3% of missing taxes equates to an annual gross tax gap of $458 billion. Subtracting late payments and other enforcements leaves an annual net tax gap of $406 billion (~ $135 billion per year).
The Public Interest Research Group (U.S. PIRG) and the Citizens for Tax Justice (CTJ) released a 2014 report examining the use of offshore tax havens by Fortune 500 companies. Their report states: “By booking profits to subsidiaries registered in tax havens, multinational corporations are able to avoid an estimated $90 billion in federal income taxes each year. These subsidiaries are often shell companies with few, if any employees, and which engage in little to no real business activity.”
The amount of untaxed U.S. income held overseas continues to fluctuate over the years but continues to at least exceed a trillion (even two trillion) dollars. The following stats come from USAFacts, the largest source for standardized US government data.
| Year | TOTAL Untaxed Income |
|---|---|
| 2010 | $1,712,538,142,000 ($1.7 trillion) |
| 2011 | $2,259,189,816,000 ($2.3 trillion) |
| 2014 | $2,727,455,285,000 ($2.7 trillion) |
Tax avoidance creates a grey area where the powerful can unethically, though legally, get out of paying a good chunk of their taxes. Find out if the system is rigged against the general public…
Who Uses Offshore Tax Shelters?
An important aspect to consider here is who or what entities are evading taxes. The cost of one low-income individual evading income taxes does not come close to the losses when a wealthy person or major corporation dodges their dues to the nation. That’s not only because of how much each economic class makes but also because of the higher percentage each is taxed.
So, who is responsible for the billions in the tax gap?
Tax Evasion and Inequality
‘Tax Evasion and Inequality,’ a 2019 research paper published in the American Economic Review, suggests that ultra-wealthy Scandinavians (the 0.01%) are responsible for much of the tax evasion in Norway, Sweden, and Denmark. It’s important to note that this data does not necessarily apply to tax evasion by U.S. individuals and businesses, but it provides some insight into which economic class tends to commit tax evasion and how they manage to do so.
“We find large rates of evasion at the top of the wealth distribution…the top 0.01 percent evades 25 percent of its true tax liability through tax havens. What drives the high evasion rates we estimate at the top?…It is the concentration of offshore wealth revealed by the leaked and amnesty data.”
‘Visibility’
The Journalist’s Resource penned an article discussing offshore tax havens, claiming tax evasion is ‘rampant among the self-employed.” The AER research paper also contends that the chances of self-employment increase as wealth increases.
The IRS tax estimate cited earlier states: “Misreporting of income amounts subject to substantial information reporting and withholding is 1 percent; of income amounts subject to substantial information reporting but not withholding, it is 7 percent; and of income amounts subject to little or no information reporting, such as nonfarm proprietor income, it is 63 percent.”
The IRS will not have documents from third parties (often one’s employer) to verify the tax forms submitted by self-employed individuals. The degree of transparency and extent of the coverage of the tax information available to the IRS are termed ‘visibility.’ Tax havens, therefore, have less-than-ideal visibility.
MORE ON TAXES…
Bloomberg’s List of Top Potential Tax Evaders
In 2017, international news agency Bloomberg released an article listing the 50 U.S. companies with the most cash held overseas. The article states, “The 50 top overseas cash holders in the S&P 500 have parked $925 billion of their cash and marketable securities outside the U.S., an increase of $118 billion since their filings one year ago [2016].”
Below is the top ten of the largest stashes of cash held overseas, per the Bloomberg article linked above. Please go to the original piece to see the full list of 50 companies.
| Company | Cash & Marketable securities ($B) | Cash held overseas, latest filing ($B) | Cash held overseas, previous year’s filing ($B) | Change (%) | Overseas cash /total cash & marketable securities (%) |
|---|---|---|---|---|---|
| Apple | 256.8 | 239.6 | 208.9 | +14.7 | 93.3 |
| Microsoft | 126.0 | 122.2 | 102.8 | +18.9 | 97.0 |
| Cisco Systems | 68.0 | 65.1 | 57.2 | +13.8 | 95.7 |
| Alphabet | 92.4 | 55.7 | 45.4 | +22.7 | 60.3 |
| Oracle | 59.4 | 52.2 | 46.8 | +11.5 | 87.9 |
| Johnson & Johnson | 41.9 | 41.3 | 38.2 | +8.1 | 98.6 |
| General Electric | 83.5 | 35.0 | 27.9 | -33.8 | 41.9 |
| Amgen | 38.4 | 35.0 | 27.9 | +25.4 | 91.2 |
| Gilead Sciences | 34.0 | 29.3 | 19.3 | +51.8 | 86.1 |
| Qualcomm | 28.9 | 26.8 | 27.1 | -1.1% | 92.9 |
According to the Tax Policy Center, “The corporate income tax raised $230.2 billion in fiscal 2019, accounting for 6.6 percent of total federal revenue, down from 9 percent in 2017.” Do you think corporations are getting away with paying a small percentage of the government’s total tax revenue?
Government Action?
Despite the wealth of information on tax havens, the significant governmental or regulatory intervention has either failed or not been made. Independent, nonprofit newsroom ProPublica published an exhaustive report entitled ‘The IRS Decided to Get Tough Against Microsoft. Microsoft Got Tougher.’
“Last year, the company’s [Microsoft’s] allies succeeded in changing the law, removing or limiting tools the IRS team had used against the company. The IRS, meanwhile, has become notably less bold. Drained of resources by years of punishing budget cuts, the agency has largely retreated from challenging the largest corporations…Recent years have been a golden age for corporate tax avoidance, with massive companies awash in profits routinely paying tax rates in the single digits, or even nothing at all. But how corporations manage to do this and keep the IRS at bay is mostly shrouded in secrecy. The audit process is confidential, and the IRS, for all its flaws, simply doesn’t leak.”
“…the company’s allies succeeded in changing the law, removing or limiting tools the IRS team had used against the company.”
More so than getting corrupted, the IRS appears to be severely undermatched against massive corporations. This, if true, proves worrisome. Big money = big power. A tale as old as time.
Is Using a Tax Haven Theft?
To recap, tax havens offer foreign individuals and businesses little to no tax liability in a politically and economically stable environment, as well as reduced financial visibility to avoid regulatory agencies. The main reason why you would use a tax haven is to unethically boost profits by evading taxes.
Allegedly, over $2 trillion dollars is being kept out of our economy. That’s capital that could go to paying off the $27 trillion in national debt, for example. Money that could improve social programs, infrastructure, access, and the list goes on and on. The American public is losing out on billions of dollars annually. Just think about what could be achieved with that money. For you, a family member, or a friend.
So, now it’s your turn to play your part. Do you think using a tax haven is theft? Take a few minutes out of your day to vote on the issue. You and your fellow citizens decide if an economic area is rigged.
Serve your fellow citizens as a citizen investigator
The success of our movement rests in your hands, the leaders willing to dedicate time to conduct investigations into potentially rigged areas of the economy. With your valuable work, the movement has no solid ground to stand on, no foundations, no proof, to actually hold those corrupting our system accountable for their actions.
View how much is being stolen, according to the public
Your fellow citizens have voted. Based on the evidence provided from citizen-led investigations, you voice your opinion on whether theft is occurring in each economic area. Don’t believe the economy is rigged? See what the American public has to say about that…
Eradicate the Rigged Layer with the Zero Theft Movement
Crony capitalists and corrupt officials have created a rigged layer of the economy that enables them to unethically profit off of the everyday American. This corruption has led to the 50 years of wage suppression, 50 years of price fixing and anti-competitive markets, and 50 years of legislators and regulators who work to satisfy moneyed interests, not our interests.
It’s about time we fought for what’s ours. We cannot do it without you.
Investigate your areas of interest
All areas of our economy could be experiencing rigging by crony capitalists and corrupt officials. We need to systematically each instance in order to create an ethical economy.
Find out about the financial disaster that followed the Great Depression in the savings and loan crisis.
Or learn about wasteful spending in local government contracting and federal procurement.
Alternatively, find an area that interests you most.
Commitment to nonpartisanship
The rigged layer causes all of us to suffer, regardless of our political allegiances. If we are to eliminate rigged economy theft, we have to set aside our differences and band together against crony capitalists and corrupt officials.
Free Educational Content
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We regularly publish informational articles on ZeroTheft.net that teach you all about the rigged layer of the economy in short, digestible pieces. You can better protect yourself and others from the schemes of crony capitalists by reading our articles.
Standard Disclaimer
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. ZeroTheft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.