Sunday, April 6, 2014

Tax Dodging Companies Hoarding Nearly One Trillion Overseas

Tax Dodging Companies Hoarding Nearly One Trillion Overseas | Common Dreams



"It's astounding that pro-austerity
ideologues are claiming that we have no choice but to slash spending on
vital programs like food stamps and Medicaid while big corporations are
draining the Treasury through massive tax dodging."




 

Tax Dodging Companies Hoarding Nearly One Trillion Overseas

New analysis, hearing, report make clear: tax dodging corporations siphon revenue that could help Main Street

- Andrea Germanos, staff writer
Profits for U.S. companies are at a record high, yet companies
have hoarded nearly one trillion overseas to dodge U.S. taxes, a new
Moody's analysis shows.

Photo: janinsanfran/cc/flickr
The findings, based on an analysis that looked at U.S.
non-financial, Moody’s-rated companies, also reveal that these companies
had stockpiled $1.64 trillion in cash at the end of 2013. That's about
up about 12 percent from the year before.


Leading the pack of cash hoarders is Apple, which stockpiled $158.8 billion last year.


One of the companies exploiting tax loopholes to avoid paying U.S.
taxes is Peoria, Illinois-based Caterpillar, which was scrutinized
Tuesday at a Senate Permanent Subcommittee on Investigations hearing.


"Caterpillar is an American success story that produces iconic
industrial machines. But it is also a member of the corporate
profit-shifting club that has transferred billions of dollars offshore
to avoid paying U.S. taxes," Subcommittee Chairman Carl Levin said in
his opening statement.


Current polices incentivize such practices because companies don't
have to pay taxes on profits from these overseas subsidiaries if the
money isn't brought back to the United States.


"From 2000 to 2012," Levin stated, "Caterpillar shipped $8 billion in
profits to its Swiss affiliate, reducing Caterpillar’s U.S. tax bill by
$2.4 billion."


That kind of loss of revenue has real impacts on Americans, Levin
added, because it "increases the tax burden on working families, and it
reduces our ability to make investments in education and training,
research and development, trade promotion, intellectual property
protection, infrastructure, national security and more – investments on
which Caterpillar and other U.S. companies depend for their success."


This echoes findings from a report released last week showing
that the decrease in corporate tax revenues has "demonstrably harmed
state and federal budgets and the provision of services those funds pay
for."


"Millions of Americans have yet to see any economic recovery," stated
George Goehl, Executive Director of National People’s Action, which
co-authored the report. "They're struggling to find jobs, make ends
meet, and provide for their families. This report shows that the revenue
needed for recovery didn't just vanish, it was siphoned off by
corporations who refuse to pay their fair share."


The report shows that the downward spiral in funding of public
services like schools and roads could be helped by an increase in
corporate tax revenue.   Some lawmakers, however, have pushed austerity
on Main Street as the only option, as Sarah Anderson, Global Economy
Project Director at the Institute for Policy Studies, told Common Dreams.


"It's astounding that Rep. Paul Ryan and other pro-austerity
ideologues are claiming that we have no choice but to slash spending on
vital programs like food stamps and Medicaid while big corporations are
draining the Treasury through massive tax dodging," Anderson said.


Sen. John McCain, the ranking minority member of the subcommittee,
blamed "the highest corporate tax rate of any country in the world" — 35
percent— as motivation for corporations like Caterpillar to park
profits overseas.


Yet, as Anderson and others have pointed out,


very few companies pay anything like those rates. Total corporate
federal taxes paid fell to 12.1% of U.S. profits in 2011, according to
the Congressional Budget Office. The average profitable company in the
Fortune 500 paid just 18.5% of its profits in federal income taxes
between 2008 and 2010, according to Citizens for Tax Justice, a
nonpartisan tax research organization. Dozens of large and profitable
companies paid nothing in recent years.


"It is long past time to stop offshore profit shifting and start
ensuring that profitable U.S. multinationals meet their U.S. tax
obligations," Levin stated.


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