States could save more than $1 billion a year in tax revenue if they would make simple reforms that would crack down on shady corporate practices that funnel dollars away from their coffers. But only Montana and Oregon have put the brakes on such practices thus far.

A new report by the U.S. Public Interest Research Group (U.S. PIRG) details how requiring companies to treat profits booked in infamous tax havens across the globe as domestic taxable income would have a significant effect on many states’ bottom lines. At a time when states are struggling with balancing their books, those lost dollars shouldn’t be overlooked.

“States need not wait for action in Washington,” said Dan Smith, a report coauthor and U.S. PIRG tax and budget advocate. “By modernizing their tax codes with this simple reform, states can curb incentives for moving business offshore, level the playing field for small businesses that compete with multinational corporations, and protect regular taxpayers from picking up the tab for tax dodgers.”

The document notes that closing the big business loophole is easy since it uses information that multinational corporations already report to states. It is immediately available to 22 states and the District of Columbia which have already modernized their tax codes by enacting “combined reporting” but haven’t made the tax policy change yet.

The revenue stream could be significant for larger states, as it would have resulted in an additional $246 million in tax dollars for California in 2012, as well as more than $141 million for both New York and Texas.

That said, a true solution needs to be implemented by Congress. The U.S. PIRG report says all offshore tax dodging schemes cost states $20 billion annually and the federal government $90 billion. Another report places U.S. losses at $150 billion annually.

That’s significant income, especially when many on Capitol Hill are looking to curb spending. By comparison, squeezing retirees by implementing a chained CPI cut for Social Security would save $130 billion – over 10 years!

So what is Congress’ motivation? It holds in its hands the opportunity to make changes that would have corporations pay their fair share of the tax burden. Yet it hasn’t taken any real steps to do so. Instead, there is more talk of having hard-working Americans carry the burden yet again for this country. Why? What could be the reasoning behind punishing those already getting the short end of the stick?

The public shouldn’t be forced to pay the price so lawmakers’ corporate cronies get to reap the gains again. The answer to government’s need for more dollars is staring it in the face. Elected officials shouldn’t close their eyes to it.

• Share on Facebook
• Share on Twitter
• Share via email