Jun 12, 2013
Published Wednesday, the report--Corporate Pirates of the Caribbean(pdf)--by the Institute for Policy Studies reveals that group member corporations could gain as much as $173 billion in "windfalls" should Congress adopt the group's proposal for a "territorial" tax system.
This reform--a centerpiece of "Fix the Debt" co-founders Erskine Bowles and Alan Simpson's recent deficit reduction proposal--would increase incentives to exploit tax havens by permanently exempting US corporations' foreign earnings from US federal income taxes.
"These Fix the Debt corporations are like modern day pirates," says report co-author Scott Klinger. "Their crews are not sword-wielding ruffians, but high-priced lobbyists and accountants who fight for, win, and then exploit loopholes in the tax code that allow them to avoid paying their fair share of the tax burden."
Under the current tax code, the report explains, US-headquartered corporations are required to pay a tax rate of 35 percent on their profits, regardless of where in the world those profits are earned. However, those corporations are given "full credit" for any taxes paid to foreign governments and "any profits deemed permanently reinvested offshore" are exempt from US taxes until and unless they are returned to the US.
Thus, if a corporation is able to shift their overseas profits to a country where corporate profits are lightly taxed and the taxes paid there are "permanently exempted"--as would be the case under the territorial tax system--the change would be "enormously profitable" for those companies raking in offshore profits.
Some of the major findings of the report include:
- The 59 Fix the Debt member corporations that reported their offshore profits had a combined total of more than $544 billion at the end of 2012, up from $473 billion in 2011. The average offshore stash per company rose 15 percent last year to $9.4 billion.
- Currently, these profits are not subject to U.S. corporate income taxes unless they are brought back to the United States (also known as "repatriation"). If Congress adopts Fix the Debt's proposed territorial tax system, these 59 companies would stand to win as much as $173 billion in immediate tax windfalls.
- The biggest potential winner is General Electric, which could reap a tax windfall of as much as $38 billion on its overseas earnings stash of $108 billion.
- The Fix the Debt member with the largest increase in offshore untaxed profits in 2012 among firms with more than $1 billion in offshore profits was Honeywell, with a 43 percent increase to $11.6 billion in 2012.
- Twenty-two firms reported increases of more than 20 percent in their untaxed offshore profits last year.
"If these corporate CEOs were serious about strengthening the American economy, they wouldn't be seeking more tax breaks that will only add to the national deficit," adds report co-author Sarah Anderson.
IPS released the report one day ahead of House Ways and Means Committee hearing scheduled Thursday to examine multinational corporations' use of low- or no-tax countries to shift profits offshore to avoid paying U.S. taxes.
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Lauren Mccauley
Lauren McCauley is a former senior editor for Common Dreams covering national and international politics and progressive news. She is now the Editor of Maine Beacon. Lauren also helped produce a number of documentary films, including the award-winning Soundtrack for a Revolution and The Hollywood Complex, as well as one currently in production about civil rights icon James Meredith. Her writing has been featured on Newsweek, BillMoyers.com, TruthDig, Truthout, In These Times, and Extra! the newsletter of Fairness and Accuracy in Reporting. She currently lives in Kennebunk, Maine with her husband, two children, a dog, and several chickens.
Published Wednesday, the report--Corporate Pirates of the Caribbean(pdf)--by the Institute for Policy Studies reveals that group member corporations could gain as much as $173 billion in "windfalls" should Congress adopt the group's proposal for a "territorial" tax system.
This reform--a centerpiece of "Fix the Debt" co-founders Erskine Bowles and Alan Simpson's recent deficit reduction proposal--would increase incentives to exploit tax havens by permanently exempting US corporations' foreign earnings from US federal income taxes.
"These Fix the Debt corporations are like modern day pirates," says report co-author Scott Klinger. "Their crews are not sword-wielding ruffians, but high-priced lobbyists and accountants who fight for, win, and then exploit loopholes in the tax code that allow them to avoid paying their fair share of the tax burden."
Under the current tax code, the report explains, US-headquartered corporations are required to pay a tax rate of 35 percent on their profits, regardless of where in the world those profits are earned. However, those corporations are given "full credit" for any taxes paid to foreign governments and "any profits deemed permanently reinvested offshore" are exempt from US taxes until and unless they are returned to the US.
Thus, if a corporation is able to shift their overseas profits to a country where corporate profits are lightly taxed and the taxes paid there are "permanently exempted"--as would be the case under the territorial tax system--the change would be "enormously profitable" for those companies raking in offshore profits.
Some of the major findings of the report include:
- The 59 Fix the Debt member corporations that reported their offshore profits had a combined total of more than $544 billion at the end of 2012, up from $473 billion in 2011. The average offshore stash per company rose 15 percent last year to $9.4 billion.
- Currently, these profits are not subject to U.S. corporate income taxes unless they are brought back to the United States (also known as "repatriation"). If Congress adopts Fix the Debt's proposed territorial tax system, these 59 companies would stand to win as much as $173 billion in immediate tax windfalls.
- The biggest potential winner is General Electric, which could reap a tax windfall of as much as $38 billion on its overseas earnings stash of $108 billion.
- The Fix the Debt member with the largest increase in offshore untaxed profits in 2012 among firms with more than $1 billion in offshore profits was Honeywell, with a 43 percent increase to $11.6 billion in 2012.
- Twenty-two firms reported increases of more than 20 percent in their untaxed offshore profits last year.
"If these corporate CEOs were serious about strengthening the American economy, they wouldn't be seeking more tax breaks that will only add to the national deficit," adds report co-author Sarah Anderson.
IPS released the report one day ahead of House Ways and Means Committee hearing scheduled Thursday to examine multinational corporations' use of low- or no-tax countries to shift profits offshore to avoid paying U.S. taxes.
_____________________
Lauren Mccauley
Lauren McCauley is a former senior editor for Common Dreams covering national and international politics and progressive news. She is now the Editor of Maine Beacon. Lauren also helped produce a number of documentary films, including the award-winning Soundtrack for a Revolution and The Hollywood Complex, as well as one currently in production about civil rights icon James Meredith. Her writing has been featured on Newsweek, BillMoyers.com, TruthDig, Truthout, In These Times, and Extra! the newsletter of Fairness and Accuracy in Reporting. She currently lives in Kennebunk, Maine with her husband, two children, a dog, and several chickens.
Published Wednesday, the report--Corporate Pirates of the Caribbean(pdf)--by the Institute for Policy Studies reveals that group member corporations could gain as much as $173 billion in "windfalls" should Congress adopt the group's proposal for a "territorial" tax system.
This reform--a centerpiece of "Fix the Debt" co-founders Erskine Bowles and Alan Simpson's recent deficit reduction proposal--would increase incentives to exploit tax havens by permanently exempting US corporations' foreign earnings from US federal income taxes.
"These Fix the Debt corporations are like modern day pirates," says report co-author Scott Klinger. "Their crews are not sword-wielding ruffians, but high-priced lobbyists and accountants who fight for, win, and then exploit loopholes in the tax code that allow them to avoid paying their fair share of the tax burden."
Under the current tax code, the report explains, US-headquartered corporations are required to pay a tax rate of 35 percent on their profits, regardless of where in the world those profits are earned. However, those corporations are given "full credit" for any taxes paid to foreign governments and "any profits deemed permanently reinvested offshore" are exempt from US taxes until and unless they are returned to the US.
Thus, if a corporation is able to shift their overseas profits to a country where corporate profits are lightly taxed and the taxes paid there are "permanently exempted"--as would be the case under the territorial tax system--the change would be "enormously profitable" for those companies raking in offshore profits.
Some of the major findings of the report include:
- The 59 Fix the Debt member corporations that reported their offshore profits had a combined total of more than $544 billion at the end of 2012, up from $473 billion in 2011. The average offshore stash per company rose 15 percent last year to $9.4 billion.
- Currently, these profits are not subject to U.S. corporate income taxes unless they are brought back to the United States (also known as "repatriation"). If Congress adopts Fix the Debt's proposed territorial tax system, these 59 companies would stand to win as much as $173 billion in immediate tax windfalls.
- The biggest potential winner is General Electric, which could reap a tax windfall of as much as $38 billion on its overseas earnings stash of $108 billion.
- The Fix the Debt member with the largest increase in offshore untaxed profits in 2012 among firms with more than $1 billion in offshore profits was Honeywell, with a 43 percent increase to $11.6 billion in 2012.
- Twenty-two firms reported increases of more than 20 percent in their untaxed offshore profits last year.
"If these corporate CEOs were serious about strengthening the American economy, they wouldn't be seeking more tax breaks that will only add to the national deficit," adds report co-author Sarah Anderson.
IPS released the report one day ahead of House Ways and Means Committee hearing scheduled Thursday to examine multinational corporations' use of low- or no-tax countries to shift profits offshore to avoid paying U.S. taxes.
_____________________
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