It's hard to believe now, but not a year ago the government nearly shut down over the princely sum of $75 million -- the amount of federal funding given to Planned Parenthood. To be sure, much of the opposition towards the funding was (and is) due to a willful misunderstanding of how the organization allocates its resources, but some lawmakers such as Rep. Cliff Stearns claimed that corking the government spigot would help "reduce the deficit." One would hope that Rep. Stearns and his fellow deficit hawks will be equally angry about about the recent Organisation for Economic Co-operation and Development report [pdf], which reveals that international tax evasion is costing the U.S. government far more than Planned Parenthood ever did.
According to the OECD, due to "national differences in the tax treatment of instruments, entities or transfers," multinational companies are increasingly able to exploit tax loopholes. As Reuters explains, "By claiming multiple deductions and generating fake credits, corporations can cancel out taxes owed[.]"
The savings to these companies is considerable:
Hybrid mismatch arrangements may significantly reduce overall tax for taxpayers. Although there are no comprehensive data on the collective tax revenue loss caused by hybrid mismatch arrangements, anecdotal evidence shows that the amounts at stake in a single transaction or series of transactions are substantial. For example, New Zealand settled in 2009 cases involving 4 banks for a combined sum exceeding NZD 2.2 billion (EUR 1.3 billion). Italy recently reported that it has settled a number of cases involving hybrids for an amount of approximately EUR 1.5 billion.
The US, for its part, loses tens of billions annually in corporate tax revenue thanks to the way that corporations exploit a combination of loopholes in the corporate tax code and overseas tax havens.
Admittedly, it's a figure that pales in comparison to the $3 trillion the US government has lost to tax evasion over the last decade, but amid a still-fragile economic recovery, it makes sense to close the loopholes. After all, why leave billions of dollars on the table?