US corporations have $1.4 trillion hidden in offshore tax havens

[kscarbel2]

The Guardian  /  April 14, 2016

US corporate giants such as Apple, Walmart and General Electric have stashed $1.4 trillion in offshore tax havens, despite receiving trillions of dollars in taxpayer support, according to a new report.

The sum, larger than the economic output of Russia, South Korea and Spain, is held in an “opaque and secretive network” of 1,608 subsidiaries based offshore.

The report illustrates the “massive systematic abuse” of the global tax system.

Technology giant Apple, the world’s second biggest company, topped the list with some $181 billion held offshore in three subsidiaries.

Boston-based conglomerate General Electric, which has received $28 billion in taxpayer backing, was second with $119 billion stored in no less than 118 tax haven subsidiaries.

Computing firm Microsoft was third with $108 billion, in a top 10 that also included pharmaceuticals giant Pfizer, Google’s parent company Alphabet and Exxon Mobil, the largest oil company not owned by an oil-producing state.

 

The list begins on page 18  (http://www.oxfamamerica.org/static/media/files/Broken_at_the_Top_FINAL_EMBARGOED_4.12.2016.pdf)

 

The $1.4 trillion held offshore contrasts with the $1 trillion paid in tax by the top 50 US firms between 2008 and 2014.

The companies have also enjoyed a combined $11.2 trillion in federal loans, bailouts and loan guarantees during the same period.

Overall, the use of tax havens allowed the US firms to reduce their effective tax rate on $4 trillion of profits from the US headline rate of 35% to an average of 26.5% between 2008 and 2014.

This helped firms spend billions on an army of lobbyists calling for greater state support in the form of loans, bailouts and guarantees, funded by taxpayers.

The top 50 US firms spent $2.6 billion between 2008 and 2014 on lobbying the US government.

For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.

Tax avoidance by US corporations is estimated to cost the world’s largest economy some $111 billion a year, and is also fueling the global wealth divide by draining $100 billion from the poorest countries.

“Tax dodging practiced by corporations and enabled by federal policymakers contributes to dangerous inequality that is undermining our social fabric and hindering economic growth,” the report said.

The report singled out British overseas territories such as Bermuda for their popularity with US firms seeking to slash their tax bill by “profit-shifting”.

In 2012, US firms reported $80 billion of profit in Bermuda, more than their combined reported profits in Japan, China, Germany and France, four of the world’s five largest economies.

[Jason O]

Lowering the corperate tax rate in the U.S. would remove much of the incentive for companies to "offshore" their profits. 

As for wealth inequality - What's not fair is that %50 of the population in the US don't pay taxes (net), while soaking up various forms of taxpayer handouts. 

 

Edited April 14, 2016 by Jason O