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Waylon Wu
Mr. Davis
Government 2
11/1/15

Offshore Tax Havens

18.2 trillion dollars! As of this moment our country is in about
eighteen trillion dollars in debt. How in the world could this possibly
happen? The truth is we will probably never find out so the only thing we
can do is try and fix this problem. One way to help solve this dilemma is to
ban the corporate use of offshore tax havens because many companies are
not paying their rightful share of taxes, America is not generating enough
tax revenue, and not enough jobs are being produced.
Many big companies have been cheating the system by storing money
offshore so they can pay fewer taxes. This results in a huge loss of cash flow
into the government so that we are unable to cover the expenses. Eightythree of the Fortune 100 companies in the United States have used offshore tax
havens to lower their taxes ("Offshore Tax Havens"). The voluminous amount of
large corporations not paying their rightful amount of taxes is greatly impacting
the economy negatively. Today, U.S. corporations have an estimated $1.7 trillion of
un-repatriated foreign profits sitting offshore (Shaxson 23). 1.7 trillion dollars
may not be enough to cover the entirety of our debt, but it would certainly help
lessen the amount a great deal. According to a 2008 Senate report, the use of
secret offshore accounts to evade U.S. taxes costs the Treasury at least $100 billion
annually ("Bradley Lindsey Examines"). 100 billion dollars annually the Treasury
is not attaining can quickly add up and we will find ourselves losing a lot of

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potential income. This amount of debt accumulating could result in some serious
consequences in the near future.
Due to all those corporate companies using offshore tax havens to avoid
paying their taxes, America is not generating enough tax revenue. This matter is
critically damaging our financial issue and driving our country into a larger
national debt. America has over $18.2 trillion in national debt (Zucman 53). Not
generating enough revenue to cover our costs is causing our national debt to
rapidly escalate each day. America has an unsustainable federal deficit
("INTERNATIONAL TAXATION"). As long as we have an unsustainable deficit, we
will never be able to solve our debt problem and it will only get worse. 31
corporations represented by the Business Roundtable have avoided $128 billion in
federal income taxes by setting up more than 500 subsidiaries in tax haven
countries (LEVELING THE PLAYING). Allowing subsidiaries to be set up in
tax haven countries by large corporations is siphoning money intended for our
government to offshore bank accounts where it becomes untouchable. All of this
corporate greed is hurting our government and some of the less fortunate citizens.
Not only are offshore tax havens causing a loss of cash flow into the
government, but it is also causing a loss of jobs. Without the money the
government requires coming in, we are unable to create any jobs deeply needed by
the citizens in America. Tax breaks have contributed to the loss of millions of
manufacturing jobs and the closure of some 60,000 American factories since 2000
(Abusive Offshore Tax). Losing so many manufacturing jobs and factories will
cause even less money to come into the government possession because tax paying
citizens will be unable to pay without a job. In addition, fewer resources will be
produced due to the closure of so many factories. Corporate America is not paying

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their fair share in taxes so we cannot create the millions of jobs the country needs
(Hoffman). Without the millions of jobs the country needs being created, a vicious
cycle transpires where citizens are unable to pay taxes, so even less money is
being collected, and the government is forced to support these people, so the
payout of money increases. Big oil companies and corporations are shipping jobs
and profits overseas ("WHAT IS THE U.S."). This means money is not recycling
throughout the United States and as other countries take our money, growing their
economy and becoming more powerful, our economy is declining. Even though
offshore tax havens and loss of jobs are a colossal part of why our national debt is
so titanic, it is not the only reason America is over 18 trillion dollars in debt.
Some could argue that banning corporate use of offshore tax havens to try
and fix the debt would be a waste of time because it is simply just the
governments poor management of money that put us in this seemingly
insurmountable debt. The government has been increasing its spending
particularly on such items as Social Security, Medicare and, for a time, national
defense at a rate faster than revenues have been growing (Haskins). The
governments deficit spending is a clear sign of poor financial management and if
we dont resolve this problem first, there truly is no point attempting anything else.
As the debt expands, so do the interest payments. In addition, the high inflation
and interest rates of the 1970s and early 1980s contributed to the rapidly growing
debt (Bloch). Our government has been managing money poorly for years now
and still has not learned how to change for the better. We have not learned from
history and this will come back to bite us eventually. Even with inflation and
interest rates declining in recent years, the debt has not been reduced because
spending has continued to outpace revenues (Bohn). Even when the economy

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seems to be getting better with inflation and interest rates declining, we manage
to spend even more keeping our debt increasing a steady rate. So maybe we cant
fix the countries national debt without resolving our governments spending habits,
but we are not limited to it. Anything can help and solving the offshore tax haven
issue would definitely help lessen the debt.
The United States national debt could be due to many different factors and
we may never know what is the true reason and who is responsible for all the debt,
but in order to fix it, we have to start somewhere. Solving the corporate income tax
issue is as good a place to start as any. Fixing the national debt is not going to be
an easy task but if we dont, there will be some serious consequences, so we must
unite and work together to try and save our beloved country.

Works Cited
"Abusive Offshore Tax Avoidance Schemes - Talking Points." Abusive
Offshore Tax AvoidanceSchemes - Talking Points. N.p., n.d. Web. 29 Sept.
2015. <http://www.irs.gov/Businesses/Small-Businesses-&-SelfEmployed/Abusive-Offshore Tax-Avoidance-Schemes-Talking-Points>.

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Bloch, Stephan "U.S. Federal Deficits, Presidents, and Congress." U.S.

Federal Deficits, Presidents, and Congress. N.p., n.d. Web. 26 Oct. 2015.
<http://goliards.us/adelphi/deficits/index.html>.
Bohn, Henning. The Economic Consequences of Rising U.S. Government
Debt: Privileges at Risk(2011): n. pag. July 2011. Web.
<http://www.econ.ucsb.edu/~bohn/papers/BohnDebtConsequences.pdf>.
"Bradley Lindsey Examines Offshore Tax Havens." Raymond A. Mason
School of Business.
William
& Mary, 7 May 2009. Web. 17 Oct. 2015.
<https://mason.wm.edu/news/2009/lindsey14may09.php>.
Haskins, Ron (2015) "The Federal Debt Is Worse than You Think." The
Brookings Institution. N.p., 08 Apr. 2015. Web. 26 Oct. 2015.
<http://www.brookings.edu/research/opinions/2015/04/08-federaldebt-worse-than-you
think-haskins>.
Hoffman, Taylor Morgan (2001) "The Future of Offshore Tax Havens,"
Chicago Journal of
International Law: Vol. 2: No. 2, Article 22. Available
at:
http://chicagounbound.uchicago.edu/cjil/vol2/iss2/22
"INTERNATIONAL TAXATION." United States Government Accountability
Office. N.p., 8
Dec. 2008. Web. 17 Oct. 2015.
<http://www.gao.gov/new.items/d09157.pdf>.
"LEVELING THE PLAYING FIELD: CURBING TAX HAVENS AND
REMOVING TAX INCENTIVES FOR SHIFTING JOBS OVERSEAS." The
White House. The White
House, 4 May 2009. Web. 02 Nov. 2015.
<https://www.whitehouse.gov/the-press office/leveling-playing-fieldcurbing-tax-havens-and-removing-tax-incentives-shifting-jobs>.
"Offshore Tax Havens." Sen. Bernie Sanders. N.p., n.d. Web. 29 Sept. 2015.
<http://www.sanders.senate.gov/newsroom/recent-business/offshoretax-havens>.
"WHAT IS THE U.S. POSITION ON OFFSHORE TAX HAVENS?" Government
Printing
Office. N.p., 18 July 2001. Web. 17 Oct. 2015.
<http://www.gpo.gov/fdsys/pkg/CHRG
107shrg75473/html/CHRG107shrg75473.htm>.
Shaxson, Nicholas. Treasure Islands: Uncovering the Damage of Offshore
Banking and Tax Havens. New York City: Palgrave Macmillan, 2011. Print.
Zucman, Gabriel. The Hidden Wealth of Nations:

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The Scourge of Tax Havens. N.p.: n.p., n.d. Print.