Last week, President Barack Obama announced a plan for an overhaul of the corporate tax code. As he and Congress take up tax reform, they should learn from Oregon's recent bipartisan leadership combating offshore tax dodging.
The use of offshore tax havens has become a major enterprise for large corporations to avoid their tax responsibility. I've seen it first-hand. I worked as a corporate tax accountant for 15 years before my husband and I started a small business.
Personally, I'm proud to pay my fair share of taxes. I believe I have a responsibility to help support our schools and pay for public safety, roads, and other infrastructure. This isn't altruism -- we need these investments for our businesses and our communities to prosper.
This sense of responsibility seems to be lost on some in corporate America.
Current tax law allows corporations to indefinitely defer paying U.S. taxes on overseas profits. They hire an army of tax lawyers and accountants to manipulate the tax code and shelter profits earned in the United States in countries with low corporate tax rates.
Fortune 500 companies now collectively hold over $1.6 trillion in profits offshore -- yes, that's trillion. Much of this is earned in the United States but shifted overseas to avoid tax liability.
In fact, one building in the Cayman Islands is home to 18,867 corporate subsidiaries.
This sort of tax haven abuse costs the U.S. Treasury an estimated $90 billion a year. Oregon loses an estimated $283 million annually. That's $283 million that could be helping improve our schools, rebuilding our infrastructure, or accelerating economic recovery.
I'm proud that this year the Oregon legislature unanimously passed legislation addressing this gaping hole in our nations laws. The bill, HB 2460B, treats income that companies list in offshore tax havens as domestic income, keeping an estimated $18 million in Oregon in 2014 and more in future years.
But while Oregon is taking action to combat offshore tax dodging, Congress is facing enormous pressure to expand it. Corporate lobbyists are pushing Congress to permanently exempt offshore profits from U.S. taxation -- a so-called "territorial" tax system.
As a small business owner, I dont buy it. When large corporations dodge their tax liability it leaves the rest of us picking up the tab. And it gives those large companies a financial advantage over small businesses that play fair and don't hire high-priced lawyers to hide their profits in the Cayman Islands.
Don't just take my word for it. A wide majority of small businesses owners share these same views. A poll by the Main Street Alliance and the American Sustainable Business Council has found that:
* More than four out of five small business owners (85 percent) oppose permanently exempting offshore profits from U.S. taxation through a territorial tax system.
* 76 percent support closing overseas tax loopholes by taxing profits based on where sales are made, where employees work, and where assets are located.
* 64 percent support ending tax deferral, requiring corporations to pay U.S. taxes on overseas profits, with credit for foreign taxes paid.
* By a margin of more than two to one, small business owners prefer closing corporate tax loopholes over cutting education, infrastructure or Social Security and Medicare.
Respondents in this scientific poll were politically diverse: 47 percent Republican; 27 percent Democratic; and 26 percent Independent or other.
When it comes to small business opposition to corporate tax dodging, there is no partisan divide. The real division is between big businesses and small ones.
Yet too often when politicians and the media seek the "business perspective" on an issue, they look no further than a position paper from the U.S. Chamber of Commerce, which, unlike local chambers in towns across America, primarily works to protect the interests of large corporations.
I want to make something clear: when the Chamber's lobbyists push to protect and expand offshore tax dodging, they are not speaking for small business owners like me.
The Oregon legislature has provided a bipartisan example of how blocking the use of offshore tax havens can help level the playing field between large and small businesses while raising revenue needed for economy-boosting investments at home.
Congress should follow Oregon's lead and say "no" to offshore tax dodging.
Field has been the co-owner of Paperjam Press in Portland for over 20 years, and serves on the Executive Committee of the Main Street Alliance of Oregon, a coalition of small business owners.
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