Dear Commons Community,
Foreign profits held overseas by U.S. corporations to avoid taxes at home nearly doubled between 2008 to 2013. to over $2.1 trillion. GE tops the list, followed by Microsoft, Pfizer, Merck, Apple. As reported by Reuters:
“Foreign profits held overseas by U.S. corporations … doubled from 2008 to 2013 to top $2.1 trillion, said a private research firm’s report, prompting a call for reform by the Senate’s top tax law writer. The new numbers certainly highlight what is one of the key challenges for tax reform. I do think there need to be some reforms in this area,” Senate Finance Committee Chairman Ron Wyden told reporters on Tuesday on Capitol Hill.
Under U.S. law, corporations do not have to pay income tax on most of their overseas profits until they are brought into the United States. These earnings can be held offshore for years if they are classified as indefinitely invested abroad.
The research firm, Audit Analytics, said in a report issued last week that the total of such earnings was up 93 percent from 2008 to 2013, citing federal financial filings for companies listed in the Russell 1000 index of U.S. corporations.
Conglomerate General Electric Co had the biggest pile of earnings stored abroad, at $110 billion, the firm said.
Next were software maker Microsoft Corp, with $76.4 billion; drugmakers Pfizer Inc, with $69 billion, and Merck & Co Inc, with $57.1 billion; and high-tech group Apple Inc, with $54.4 billion, it said.
In response, GE said in a statement: “GE operates in more than 170 countries, and most of these overseas earnings have been reinvested in active business operations like manufacturing facilities and loans to non-U.S. customers.”
A Merck spokesman said the company files its tax returns in accordance with all applicable laws and regulations.
A Microsoft spokesman referred questions to 2012 congressional testimony, in which company officials said it abides by foreign and U.S. tax laws.
In testimony in 2013 before Congress, Apple Chief Executive Tim Cook said the company is a large taxpayer and does not use tax gimmicks. Apple declined to comment on the new report.”
All of these companies operate within the law but it is how they stretch the law that is the problem. Tax loopholes indeed.