Top 500 US Firms Keep $2.1 Trillion In Tax Havens, Study Finds

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Above Photo: From CreativeResistance.org. Sue Simensky Bietila.

New report suggests that overseas cash holdings mean US is losing out on an estimated $620 billion in tax revenue

The largest 500 U.S. companies would owe an estimated $620 billion in U.S. taxes were it not for the more than $2.1 trillion in offshore cash that most of the firms hold in foreign tax havens, according to a study released Tuesday.

The report (PDF), based on an analysis of company filings to the IRS and the Securities and Exchange Commission, was authored by the Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund.

It found that close to three-quarters of the 500 biggest companies by gross revenue utilize tax havens through foreign subsidiaries in countries with low tax liability, including Bermuda, Ireland, the Netherlands and the Cayman Islands.

“Most of America’s largest corporations maintain subsidiaries in offshore tax havens,” the report said. “At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014.”

The study also found that in five of the commonly used tax haven countries — Bermuda, the Cayman Islands, British Virgin Island, Bahamas and Luxembourg — the reported profits of subsidiaries of U.S. companies were more than GDPs of the countries in which the firms were registered.

Companies

Apple is by far the largest holder of offshore money not subject to U.S. taxes, with $181.1 billion. If those profits were taxed at U.S. rates, the company would pay $59.2 billion.

General Electric and Microsoft hold $119 billion and $108.3 billion in offshore cash holdings, respectively, coming in at second and third on the list.

Apple has consistently defended itself against claims of tax-dodging. Responding to a New York Times article in 2012 on the topic, the tech giant said it “pays enormous amounts of taxes, which help our local, state and federal governments.” In regards to deals between Apple and the Irish government, the firm has previously noted that it is bound by the same tax laws at other countries in the country.

Microsoft and General Electric have both argued in similar veins in recent years. In 2013, General Electric said it paid “billions of dollars in corporate income taxes to governments around the world, including U.S. federal income taxes, making it one of the highest payers of corporate income taxes.”

In 2011, a spokesperson for Microsoft said the company “complies with the tax laws of every jurisdiction in which we do business.”

Tuesday’s study found that 30 of the top 500 companies accounted for 65 percent, or $1.4 trillion, of the total accumulated profits.

Between 2008 and 2014, the study added, the amount of offshore cash holdings for American multinationals doubled.

“For many companies, increasing profits held offshore does not mean building factories abroad, selling more products to foreign customers, or doing any additional real business activity in other countries,” the study said. “Instead, many companies use accounting tricks to disguise their profits as ‘foreign,’ and book them to a subsidiary in a tax haven to avoid taxes.”

While not all companies voluntarily disclose how much they would pay in U.S. taxes if it were not for operating in foreign tax havens, the 57 that did, expected they would pay a combined $184.4 billion extra, meaning they were effectively paying on that money a 6 percent tax rate, far lower than the 35 percent corporate tax rate in the U.S.

“Congress has created loopholes in our tax code that allow offshore tax avoidance, which forces ordinary Americans to make up the difference,” the report said. “The practice of shifting corporate income to tax haven subsidiaries reduces federal revenue by an estimated $90 billion annually.”

  • Wacanta

    I would imagine that most, if not all, of the CEO’s of these anti-American companies are rwnj’s who bitch about the welfare moochers and want to cut every program that helps America’s neediest.

  • TecumsehUnfaced

    By any sensible measure these corporations are traitors to the country and should suffer execution by dismemberment.

  • Keeping a person just desperate enough so they always vote Democrat is not ‘helping America’s neediest’. Putting limits on handouts and encouraging a person to become self-sufficient as quickly as possible is.

    Under your own Saint William Jefferson Clinton welfare was substantially reformed with this vison as a guide and it was working – until Obama encourged Congress to roll back all the progress made and encouraged record numbers of people to become completely dependent on government handouts.

    But I bet you just love that lifestyle.

  • kevinzeese

    I don’t what website you think you are on but there are no fans of Bill Clinton here. His destruction of welfare has not led to a better life for the neediest. In fact, poverty is now at record levels as is the non-participation rate in the economy. If the plan was to get people to work, it failed. Time to end the experiment and re-build the social safety net. That begins with fixing the wealth divide where the 100 wealthiest Americans have wealth equal to half the population. That is the problem — if you can’t see it, you don’t want to see it.

  • And exactly how do we go about ‘fixing the wealth divide”?

    Capitalism breaks my heart – reads the graphic above.

    Well socialism doesn’t exist (for long) without it being a parasite on capitalism.

    Socialists love to point to Europe, where socialism feeds on countries that are 95% capitalist. And thus prove my point for me.

  • “[Bill Clinton’s] destruction of welfare has not led to a better life for the neediest.”

    Actually things were generally improving under the changes made during his watch. Interesting you blame him for them though. While he did wind up signing the bill (part of the famous Clinton ‘triangulation’) he opposed much in those very parts of it, didn’t he?

    Anyway, you’re right that now, thanks to Obama and the Democrats who had majorities in both houses of Congress during the last two Bush years and the first two Obama years and continued to hold the Senate for even longer after that, you are correct. Poverty is NOW, after seven years of failed Obama promises, at a record level as is the non-participation rate in the economy and you left out that the number of those on government handout programs hit an all-time high too.

    ON the bright side, even Obama’s people are admitting that more and more jobs are going to immigrants, both legal and illegal. So we legal long term citizens and our families and friends have that to celebrate!

    Welfare to work worked. Until Obama and the Democrats dismantled it.