Nation of Change: Corporate America is Hiding $2 Trillion in Profit From the IRS

The following is an excellent article from the Nation of Change website written by Alan Pyke on March 14, 2014 titled “Nation of Change: Corporate America is Hiding $2 Trillion in Profit From the IRS” and I quote:

“The largest American multinational companies parked an additional $206 billion of profits in offshore accounts last year, according to Bloomberg, bringing the total amount of profits stashed where U.S. tax officials can’t touch them up to about two trillion dollars.

The 307 companies that Bloomberg examined now hold a combined $1.95 trillion offshore, allowing them to avoid paying U.S. taxes on those earnings. The majority of the total is concentrated in just a few corporate hands. The largest 22 of those companies hold more offshore than the other 285 combined.

 

General Electric leads the pack, with $110 billion held offshore. Tech companies like Microsoft ($76.4 billion), Apple ($54.4 billion), IBM ($52.3 billion), and Google ($38.9 billion) also dominate, along with drug companies like Pfizer ($69 billion) and Merck ($57.1). The tech giants have drastically accelerated their offshore holdings in recent years, with Microsoft and Google more than doubling and Apple more than quadrupling offshore profit holdings from 2010 to 2013.

This propensity for profit-stashing among tech companies brought scrutiny from Congress last year, with committee reports and a Senate hearing where Apple CEO Tim Cook was called on to justify his firm’s tax behavior. That scrutiny exposed the complexities of how Apple pulls off its tax avoidance scheme through a set of Ireland-based subsidiary companies, but it also underscored that everything these companies are doing is legal. The current international corporate tax system encourages countries like Ireland, Luxembourg, and others to race each other to the bottom of the business tax rate barrel.

While lawmakers around the world talk a good game about reforms that would change the incentives faced not only by companies but tax haven governments, most of that talk is still premised on the same sort of patchwork system that’s in place now. Ireland, for example, made a splash last fall by announcing some changes to its tax laws, but they do little to end the country’s status as a tax haven. Tweaking specific rules within that flawed system seemsunlikely to produce meaningful changes in corporate behavior.

These companies face no meaningful negative consequences to stashing trillions from the taxman. When they need to access their offshore cash for investing in production or personnel, they can simply use the untaxed profits as collateral for borrowing from the financial sector. There is no business reason to stop ducking U.S. taxes, so it is up to lawmakers to address the problem.

Many in Congress want to tackle offshore profit stashing in ways that would be very generous to these companies. Slashing the corporate tax rate or offering a “tax holiday” for them to bring their money back home would reward their behavior. President Obama’s version of corporate tax reform would raise a significant amount of money over the coming decade, but still far less than what companies would be paying if they weren’t gaming the rules. While precise estimates of lost revenue are difficult to make, previous inquiries into profit offshoring found that it cost the U.S. between $30 billion and $90 billion each yearduring the early and middle 2000s, when the pile of untaxed corporate profits was much smaller.

States and localities also lose out on tens of billions of dollars in tax revenue each year to similar offshoring strategies. A recent study found that by closing just one small loophole in state business tax laws, states could bring in a billion dollars in new revenue almost overnight.

Despite corporate protests, there is no historical evidence that higher corporate tax rates hurt the economy, and companies that pay higher tax rates tend to create more jobs than those that game the rules to minimize their tax liability.”

(CONGRESS IS TAKING CARE OF THE BILLIONAIRIES EVEN IF THEY GO BANKRUPT.  THEY DON’T DO THE SAME FOR THE LITTLE GUY THOUGH.  THEY JUST BEAT THE TAR OUT OF HIM.  THESE ARE THE EXACT SAME ISSUES THAT ROBERT KUTTNER IS TALKING ABOUT IN HIS BOOK WE’RE READING TITLED “DEBTORS’ PRISON: THE POLITICS OF AUSTERITY VERSUS POSSIBILITY” WHICH I’M PUTTING EXCERPTS FROM ON MY BLOG SITES, HOPING EVERYBODY READS THE WHOLE BOOK AND NOTIFIES THEIR LEGISLATORS IN WHAT IS GOING ON BECAUSE THERE ARE A LOT OF AUTHORS OUT THERE SAYING BASICALLY THE SAME THING.  THE GOVERNMENT MUST PUT MORE REGULATIONS ON THE BIG CORPORATIONS AND BIG INVESTMENT BANKS. POLITICIANS ARE GOING TO HAVE TO IGNORE THE BIG BANK LOBBY AND THE KOCH BROTHERS AND A.L.E.C., WHO ARE VIRTUALLY WRITING THE LAWS IN CONGRESS.

LaVern Isely, Overtaxed Independent Middle Class Taxpayer and Public Citizen and AARP members

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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