“…according to a recent study from the U.S. Public Interest Research Group Education Fund and Citizens for Tax Justice, more than 70 percent of Fortune 500 companies hide some of their earnings in offshore tax havens in order to avoid paying taxes

the 30 companies with the most profits booked offshore for tax purposes accounted for 62 percent of all the profits booked offshore for tax purposes. So that’s 30 companies that had more profits booked offshore than all the other companies we looked at combined…

There are very clear solutions to this. The first one I’ll say right now [is that] companies are able to [defer] paying taxes on the profits they claim were earned offshore until they “bring the money back” and officially declare that it’s back in the United States, even though it often never left in the first place. If you just end deferral and say, “Companies can no longer put off paying taxes on the profits that they declare are … abroad,” that would end the biggest incentive companies have to shift profits offshore.

You can also kind of go after some of the specific tricks that companies use — like selling the rights to a product you’re going to release soon to a subsidiary in a tax haven and then being able to just pay that subsidiary all the royalties for it. You can go after, you know, those very specific abuses.

The third thing I’d say is [that] we need transparency. Something that our report talks about is how not every company even discloses subsidiaries they have in tax havens. Not every company discloses how much cash they have booked off-shore. Very few companies disclose what they’d have to pay in taxes if their profits weren’t offshore. Basically, no companies actually disclose each country where they’re making money and paying taxes to. We think companies should just have to report, where are they actually doing business? Where do they have employees? Where do they have sales? And where are they paying their taxes? If we had that kind of disclosure, it would just be abundantly clear what companies are gaming the system. When you see things like, “Oh, you say you have this much in profits in Bermuda, but you don’t have any employees and you’ve barely done any sales there,” that would give folks a clue that there’s something fishy going on there…

The estimates are that we lose $90 billion every single year from corporations pretending they made money in offshore tax havens to avoid taxes. That is a lot of money; that’s almost $1 trillion over 10 years, and I think anyone would agree that that’s about the worst use of the money, sitting on the books in Bermuda when it could be used to invest in public transportation or used to reduce the deficit…

The way these loopholes work is just the quintessential example of what happens when a few special interests are able to get the laws written in their favor. When you talk about inequality, think about the average person, filing their taxes every year; or a main street small business owner, filing his or her taxes. They don’t have armies of tax lawyers to figure out how to use these loopholes. They don’t have money that they can just book offshore through a Cayman Island subsidiary. So they end up footing the bill for [corporate tax-dodging] that just doesn’t make any sense. It’s not fair. There shouldn’t be companies like GE or like Microsoft or like Pfizer that say, “We’re going to locate [in the U.S.]; we’re going to benefit from what makes America a good place to do business but when it comes to paying taxes, everyone else has to do that.” That’s essentially what’s happening now.”

(my bolds)


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by | June 17, 2014 · 6:56 pm

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