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US corporations are estimated to have hidden $1.4T in off-shore tax havens. It is only an estimate, as is the nature of tax havens. Aside from removing $1.4T from the economy, the tax havens also mean lost US tax revenues of $111B per year. They do it because it is legal and it works. It also has a high return on investment.

“For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts,” said Oxfam.

The lobbying isn’t just to government officials, but also to ad campaigns that moderate the public reaction. If spending $1 returns $3,999, then it makes financial sense to do so; and it makes competitive sense if your competition is doing it, too. The situation is likely to change because it would require the combined efforts of the nations of the world; but as more nations agreed, the incentives to others to offer tax havens would become much greater. Change may also happen if the tax havens damage the economy sufficiently, or if public reaction becomes so strong that it can’t be ignored. Until then, money flows into havens, the economies have less liquidity, and individual taxpayers must pay more than their share.

(Click on the photo for the link.)

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