We've known for a while now that 83 of the 100 biggest companies in the U.S. have subsidiaries in tax havens, a practice that lets those corporations skirt an estimated $100 billion in yearly tax liabilities.
On the list of 83 tax-dodgers, you'll find the quasi-nationalized Citigroup (which takes the top prize, with 427 subsidiaries in tax shelters), AIG, Morgan Stanley, Bank of America...
You get the idea: We've thrown hundreds of billions of dollars at these institutions that actively search for ways to avoid paying their full tax bill. Treasury Secretary Tim Geithner addressed the problem Wednesday during his testimony before the Senate Finance Committee:
[I]t's not fair to people who pay their taxes for people to continue to have the ability to evade U.S. taxes by taking advantage of offshore tax havens and a range of other provisions in current law which makes it—makes it possible to evade U.S. taxes.
That's why in the budget there is a clear commitment by the president to come to the Congress with a comprehensive set of proposals for reducing international tax avoidance. As part of that,we're going to have to bring a much more ambitious effort to deal with offshore tax havens.
That's not going to be enough, though. There's a range of other things that are—that are in the tax code now which create incentives to shift investment—jobs overseas, create other opportunities to evade U.S. taxes.
Aside from the irony of Geithner railing against tax delinquents, I think he's correct in singling out one cause of the problem—a tax code that provides companies an incentive to shift jobs abroad. Geithner also said he would get back to the committee with a "set of proposals" to fight the tax haven problem. And in Congress, Rep. Lloyd Doggett (D-Tex.) and Sen. Carl Levin (D-Mich.) have introduced their own legislation earlier this week to deal with the problem.