Economy WatchThe largest U.S.-based companies are keeping nearly $1.95 trillion in profits in low-tax offshore accounts, according to the latest Bloomberg analysis, with tech companies such as Microsoft, Apple and IBM among the worst offenders.
Reviewing securities filings from 307 multinational corporations, Bloomberg found that the companies had added $206 billion to their stockpiles of offshore profits last year, an 11.8 percent increase from 2012.
General Electric led the pack, with $110 billion held offshore. Meanwhile Microsoft’s profits held offshore have more than doubled over the past three years to $76.4 billion; while Apple’s have more than quadrupled in the same time frame to $54.4 billion.
“The loopholes in our tax code right now give such a big reward to companies that use gimmicks to make it look like they earn their profits offshore,” said Dan Smith, a tax and budget advocate at the U.S. Public Interest Research Group, which seeks to counteract corporate influence.
Even as governments around the world cut tax rates and try to keep corporations from shifting profits to tax havens, the U.S. Congress remains paralysed in its efforts, Smith noted.
In reviewing the companies’ profits, Bloomberg noted that U.S. multinational companies had reported earning 43 percent of their overseas profits in Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland, more than five times the share of workers and investment they have in those jurisdictions.
A 2013 Congressional Research Service report estimated that the government was losing around $30-90 billion a year in tax revenue due to the companies’ actions.
The problem of course is worldwide, with many countries also facing similar problems of their local companies keeping profits overseas. Some countries, like the U.K. and Japan, though have already begun reducing their corporate tax rates and making it easier for their companies to bring money home.
According to Bloomberg, companies including Coca-Cola and United Technologies Corp., working through groups such as the Business Roundtable and the Lift America coalition, are lobbying for a system that would impose lighter taxes on foreign profits.
Nevertheless, Bloomberg noted that the U.S. Congress remained in a stalemate, as they argue broader disputes over government spending and taxation.
http://www.economywatch.com/news/us-companies-stash-2-trillion-profits-overseas.13-03.html
Lo-ball figure, no doubt.
US tax rates should apply to their overseas profits- period.