China scraps trade talks with US after latest round of Trump tariffs
Report: Fortune 500 reliant on tax havens
More than 7 in 10 Fortune 500 companies have stashed profits in a tax haven, according to a new study from two liberal groups.
Citizens for Tax Justice and the U.S. PIRG Education Fund found that at least 358 large U.S. multinationals have more than 7,600 subsidiaries in tax havens, with Bermuda and the Cayman Islands the most popular destinations.
The groups also found that some of the most popular American brands - including Apple, Google and Nike - were among the serial users of tax havens.
Apple, which has faced Senate scrutiny of its tax practices, has more than $180 billion abroad, more than any other company.
General Electric and Microsoft also had more than $100 billion abroad; Pfizer, IBM and Merck each had at least $60 billion. Pfizer, PepsiCo and Merck also all have well over 100 subsidiaries in tax havens, according to the report.
In all, the groups found that multinationals had some $2.1 trillion abroad, roughly in line with previously released estimates.
"All too often, corporations' offshore cash isn't offshore at all - it's right here in the United States," said Robert McIntyre, the director of Citizens for Tax Justice. "Corporations are using skilled tax attorneys to make it appear on paper that their U.S. profits, and their U.S.-based cash, are being earned, and kept, in foreign tax havens. The tax code makes this scam possible."
Companies don't have to pay taxes on those profits until the money is brought to the U.S., and they get credit for taxes paid to other governments.
By keeping the profits out of the U.S. system, the liberal groups estimated, the companies avoid paying roughly $620 billion in taxes. The groups based that figure on the 6 percent tax rate that 57 of the companies suggested they would pay to foreign governments. The top U.S. corporate rate is 35 percent.
Both the White House and lawmakers from both parties have shown an interest in giving companies a discounted tax rate on their offshore profits and use the cash infusion to help pay for highway projects.
The tax would be levied whether the profits were brought to the U.S. or not, raising some questions among conservatives. But some Democrats are also coming around to the idea of giving companies a lower rate on offshore profits, something Republicans have long advocated for and a system currently employed by most other advanced economies.
McIntyre also made it clear that he wasn't happy with those developments. "Incredibly, Congress is considering pouring salt on the wound by giving companies a special low tax rate to 'repatriate' profits that, in many cases, are likely already here," he said.