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Study: Corporations shifting billions more offshore
At least 10 of the biggest U.S. multinational corporations have increased their offshore holdings by more than $5 billion each in the last year, according to a new report from a left-leaning group.
Citizens for Tax Justice found that the 10 corporations examined in its study, released Monday, had added a combined $106 billion to their offshore profits, led by Apple’s $28 billion.
“In recent years, multinational U.S.-based corporations have systematically accumulated staggering amounts of profits offshore,” the CTJ study found. “Much if not most of these profits were actually earned in the United States but have been artificially shifted to foreign tax havens to avoid U.S. corporate income taxes.”
According to the CTJ study, Microsoft, Pfizer, Merck, Google, Abbott Laboratories, Johnson and Johnson, Citigroup, International Business Machines and General Electric also boosted their offshore profits by at least $5 billion over the last year.
The CTJ study comes as Democrats and Republicans are continuing to spar over the best way to tax corporations and the profits they make abroad. Both sides have called for reforming corporate taxes in a way that would get rid of preferences and incentives while lowering the corporate rate, which now tops out at 35 percent.
Under the current set-up, corporations are required to pay their full rate on offshore profits. But corporations can also defer paying those taxes until they bring their offshore cash back to U.S., and also receive credits for taxes paid to foreign governments.
House Ways and Means Committee Chairman Dave Camp (R-Mich.) and other top GOP officials have called for shifting the U.S. to a so-called territorial system, which would shield most offshore corporate profits from American taxation.
Supporters of that system say it would give U.S. companies a better chance to compete internationally, and would encourage more domestic investment from corporations.
Apple and other companies included in CTJ’s study, like Microsoft, have also previously lobbied for a corporate tax holiday that would have installed a temporary rate as low as 5 percent on profits brought to the U.S.
The White House, which has said it’s interested in tax reform, has instead pushed for a minimum tax on offshore profits.
“I think that, as we lower our rate, we ought to be looking at having a kind of minimum worldwide tax rate where we're trying to level the playing field,” Treasury Secretary Jack Lew said in his confirmation hearing last month.
“We actually have a debate between whether we go one way or the other. And we have a hybrid system now, and it's a question of where we set the dial. I think that there is room to work together on this.”
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