America’s Fortune 500 companies are “playing by different rules” when it comes to the federal tax system and, according to a new report out Tuesday, are stashing $2.1 trillion in offshore tax havens—with as much as $620 billion owed to the U.S. taxpayers who are left footing the bill.
The report, Offshore Shell Games 2015: The Use of Offshore Tax Havens by Fortune 500 Companies (pdf), examines the accounting tricks that have enabled the country’s most profitable companies to hide their earnings.
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“The American multinationals that take advantage of tax havens use our roads, benefit from our education system and large consumer market, and enjoy the security we have here, but are ultimately taking a free ride at the expense of other taxpayers.” —Michelle Surka, US PIRG”U.S.-based multinational corporations are allowed to play by a different set of rules than small and domestic businesses or individuals when it comes to the tax code,” wrote advocacy organizations Citizens for Tax Justice and the U.S. Public Interest Research Group (U.S. PIRG), which together authored the study.
Nearly 72 percent of the these mega-corporations operate tax haven subsidiaries in countries like Bermuda, Ireland, Luxembourg, and the Netherlands, according to the groups’ examination of 2014 financial filings with the Securities and Exchange Commission.
In some cases, U.S. law allows a company to simply maintain a post office box at an offshore site to reap the tax benefits. For example, one five-story office building in the Cayman Islands serves as the registered address for 18,857 registered subsidiaries.
According to the study, the 30 worst offenders account for 65 percent of the total estimated offshore profits, booking as much as $1.4 trillion overseas for tax purposes.
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