Your Taxes: Feds Take in Record Haul While Corporations Hide Profits Overseas

 

Your Taxes: Feds Take in Record Haul While Corporations Hide Profits Overseas

By Burt Carey

 

Reports just before the end of the federal government’s fiscal year suggest Uncle Sam had collected a record $2.67 trillion in taxes in the first 10 months of fiscal year 2015.

Analysts expect the final tally for the year to set a record in the number of dollars collected by the feds in one year.

tax loopholes, corporations, Uncle Sam, international tax rules, tax collections, changesThat news was dampened somewhat this week with a report released by two left-leaning groups that a majority of America’s largest 500 corporations are holding some $2.1 trillion in profits in overseas accounts to avoid paying about $620 billion in U.S. taxes. The report comes during the same week that finance ministers of the G20 nations meet in Lima, Peru, to put the finishing touches on international tax rules intended to curtail tax loopholes currently being used by corporations to hide profits.

The study, by the Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund, claims that 387 of the 500 biggest firms by gross revenue are operating tax haven subsidiaries in countries such as Bermuda, Ireland, Luxembourg and the Netherlands. They used the companies’ Securities and Exchange Commission financial filings to reach their conclusions.

Interestingly, how the federal government’s coffers get filled today looks much different than it did just a half-century ago. In the 1950s, corporations paid 30 percent of the overall taxes taken in by the feds, while individual Americans paid 42 percent of those dollars. Today, individuals pay 47 percent of the fed’s tax income while corporations pay just 11 percent.

But that’s not the biggest change in tax collections between the 1950s and today. That distinction belongs to payments for Social Security and Medicare. While Social Security started out in 1937 as a 2 percent tax that covered just 10 percent of fed tax income, it is now taxed at a rate of 12.4 percent. Combined with a 2.9 percent tax for Medicare, those two make up 30 percent of the fed’s tax income.

All of that might make some Americans hopping mad to know that Apple, for example, was holding profits of $181.1 billion offshore as late as 2010, more than any other U.S. company. Apple would owe nearly $60 billion in U.S. taxes if it took the money from three overseas tax havens and brought it back to the United States, according to the study.

Bermuda, the British Virgin Islands and the Cayman Islands are three of the biggest tax havens for U.S. companies, according CTJ and the U.S. PIRG. These islands house subsidiaries of powerful multinational giants, allowing companies to filter their profits and avoid paying high corporate taxes in the U.S.

According to the report, U.S.-controlled companies on the three islands reported $155 billion in profits in 2010, the most recent available data. And yet the gross domestic product of those countries in 2010 was just $10 billion. In Bermuda, where U.S. corporations have tucked away $94 billion in profits, the gross domestic product for the year was $6 billion.

Other corporations with large profits being held overseas include General Electric, which recorded $119 billion in 18 offshore tax havens. Microsoft held $108.3 billion in five tax haven subsidiaries. And Pfizer, the drug company, used 151 tax havens for $74 billion in profits.

Just 30 of the largest 500 firms accounted for $1.4 trillion of the $2.1 trillion being held overseas. Their filings with the SEC say they are paying about 6 percent in taxes overseas, while those same dollars would be taxed at a 35 percent rate in the U.S.

Finance ministers at the G20 meetings have been working on reforms for two years.

 

Source:  Baret News

REQUEST INFORMATION