My W-2 just came in the mail, my bank is sending me reminders to download my 1099, and my TV is full of kindly tax service professionals who assure me that they’re there to help. This weekend I’ll sit down at the kitchen table with a pile of forms and a checkbook, and I’ll pay my taxes. It’s not glamorous, but it’s something we all do.
Well, almost all of us. Some of the largest corporations and wealthiest individuals use accounting gimmicks to abuse loopholes in our tax system. One of the most notorious practices is reporting profits and income earned in the United States to a tax haven such as the Cayman Islands or Belize. And those that have access to the fancy accountants and lawyers that take advantage of our tax code on the federal level do so to the tune of a combined $150 billion per year.
While companies report profits to their shareholders, they dodge state and federal taxes—even those who have received federal bailout money. These corporations avoid contributing to the communities in which they thrive and do business. The burden of funding the education, transportation, healthcare, and legal systems that benefit us all then falls upon us as responsible individual taxpayers and small businesses.
Last week, the Georgia PIRG Education Fund’s new report highlighted how tax dodging cost the state of Georgia $918 million in tax revenue last year alone. This is nearly equal to the billion dollars in cuts that have troubled K-12 education in the past few years in Georgia. If the legislature chose to allocate this $918 million to education, for example, it could pay the salary for 17,381 more teachers based on the average Georgia teacher’s salary.
Let’s hope our leaders in both Atlanta and Washington work to close some of these loopholes that allow those with access to these accounting gimmicks—just the largest corporations and wealthiest individuals—to avoid the responsibility to society that we all should share.