Most of the 500 largest US corporations have offices in offshore tax havens around the world, which they use to avoid paying US taxes through “accounting tricks,” according to a study released on Thursday.
About 72 percent of Fortune 500 companies had subsidiaries in low-tax jurisdictions in 2013, allowing them to avoid paying about $90 billion in federal income tax, according to Citizens for Tax Justice and the US Public Interest Research Group (PIRG), two left-leaning tax activist groups.
“The loopholes in America’s corporate tax (code) have grown so outrageous that our policymakers should be embarrassed,” said Steve Wamhoff, legislative director at Citizens for Tax Justice, which studies tax policy and often criticizes corporations.
“The data in this report demonstrate that a huge portion of the supposedly ‘offshore’ profits are likely to be US profits that are manipulated so that they appear to be earned in countries like Bermuda or the Cayman Islands where they won’t be taxed. Policymakers should close the loopholes that make this manipulation possible,” Wamhoff said.
In 2013, Apple, General Electric, Microsoft, Pfizer and Merck had the highest amount of profit held offshore in subsidiary shell companies, which are often just post office boxes located in territories like Bermuda and Cayman Islands that have corporate tax rates far lower than those in the United States, according to the study.
A US Senate report last year revealed that Apple had paid nearly no taxes on its overseas earnings. Between 2009 and 2012 Apple hid at least $74 billion in profits from US tax authorities by parking its cash in Ireland that has a corporate rate of 12.5 percent compared with 35 percent in the US.
The US Congress has not thoroughly overhauled the country’s tax laws since 1986, leaving it riddled with loopholes that wealthy corporations, families and individuals can take advantage of.