Report: Connecticut small businesses pay extra $7K in corporate taxes due to loopholes for big biz
Small businesses in Connecticut pay about $7,000 apiece in additional taxes to make up for lost state revenue due to loopholes allowing big corporations to forego paying taxes on profits earned in other countries, such as the Cayman Islands, according to a new report issued by ConnPIRG this week.
“The impact of offshore tax dodging by large multinationals has a direct impact on taxpayers of all types,” said Evan Preston, state director of the research organization.
Each year, corporations around the country avoid paying about $110 billion in state and federal income taxes by reporting profits are earned in offshore tax havens — mostly small island nations like Bermuda, the British Virgin Islands and the Cayman Islands, according to ConnPIRG. In Connecticut, the figure is about $2.7 billion. And when that figure is divided up between the smaller companies throughout the state, the burden for these companies comes out to the seventh-largest in the nation, states the report, which was released on Wednesday, as residents and businesses around the nation filed taxes.
According to ConnPIRG, Connecticut’s small businesses have an additional state corporate tax obligation of $1,298 per small business because of this practice, while the additional federal corporate tax obligation figures out to $5,635 per business, for a total of $6,933. That’s more than twice the national average of $3,244 per business.
The state with the largest additional obligation per small business is Delaware, at $15,843.
“Connecticut comes in near the top because the large companies and firms that are based here are particularly adept at hiding money offshore,” said Preston. “And when we’re shifting the burden to the local small businesses and taxpayers, it makes it all the harder to have a vibrant climate for jobs and investment at the local level.”
The report recommends closing a number of offshore tax loopholes.
In March, Pew Research Center published survey findings that show the majority of Americans would be in favor of such a move. According to the findings, 64 percent of Americans said “the feeling that some corporations don’t pay their fair share” bothers them “a lot.” An additional 18 percent said it bothers them some, while 16 percent it doesn’t bother them too much or at all. That was the chief concern logged by the American public in the poll, which was conducted between Feb. 18 and Feb. 22.