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Study: 32 Illinois Fortune 500 Companies Holding At Least $147 Billion Offshore

In 2015, more than 73 percent of Fortune 500 companies maintained subsidiaries in offshore tax havens, according to Offshore Shell Games, released this week by the U.S. PIRG Education Fund, Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

Collectively, multinationals reported booking $2.5 trillion offshore, with just 30 companies accounting for 66 percent of this total. By indefinitely stashing profits in offshore tax havens, corporations are avoiding up to $717.8 billion in U.S. taxes.

Here in Illinois, Abbvie, Abbott Laboratories, Mondelez, Caterpillar, and McDonald's combine to hold $98.5 billiion in offshore tax havens like the Bahamas, Cayman Islands, and Hong Kong.

"Corporate tax dodging may be legal, but it's certainly not good for everyday taxpayers and responsible small businesses," said Abe Scarr, Illinois PIRG education fund director.

"It disadvantages small businesses that don't have scores of tax lawyers, creates an economic environment that favors accounting tricks over innovation and real productivity, and forces the rest of us to foot the bill.

"We're beginning to see a growing international interest in cracking down on corporate tax dodging, and with $717.8 billion on the line, it's time for the U.S. to start doing the same."

Said Matthew Gardner, of the Institute on Taxation and Economic Policy: "Every year, corporations collectively report that they have tens of billion more in cash stashed offshore than they did the year before.

"The hard fact is that the U.S. tax code incentivizes tax haven abuse by allowing companies to indefinitely defer taxes on offshore profits until they are 'repatriated.' The only way to end this kind of tax avoidance is by closing the loopholes in the tax code that enable it."

Key findings of the report:

  • 367 Fortune 500 companies collectively maintain 10,366 tax haven subsidiaries.
  • The 30 companies with the most money booked offshore for tax purposes collectively operate 2,509 tax haven subsidiaries.
  • 58 percent of companies with any tax haven subsidiaries registered at least one in Bermuda or the Cayman Islands, countries with no corporate tax.
  • The profits that American multinationals collectively claim to earn in these island nations total 1,884 percent and 1,313 percent, respectively of each country's entire yearly economic output, an impossible feat.
  • The 30 companies with the most money booked offshore for tax purposes collectively hold nearly $1.65 trillion overseas. That is 66 percent of the nearly $2.5 trillion that Fortune 500 companies together report holding offshore.
  • Only 58 Fortune 500 companies disclose what they would expect to pay in U.S. taxes if these profits were not officially booked offshore. In total, these 58 companies would owe $212 billion in additional federal taxes, equal to the entire state budgets of California, Virginia, and Indiana combined.
  • The average tax rate the 58 companies currently pay to other countries on this income is a mere 6.2 percent, implying that most of it is booked to tax havens.

Companies headquartered in Illinois were highlighted:

  • AbbVie Inc: AbbVie has $25 billion offshore, more than any other company in Illinois. Abbvie has 38 subsidiaries in tax havens.
  • Abbott Laboratories: Abbott Laboratories has subsidiaries in 94 tax havens, more than any other company in Illinois. They have $22.4 billion held offshore.

The report concludes that to end tax haven abuse, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore loopholes, strengthen tax enforcement, and increase transparency.

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Previously in Tax Scams:
* Deepwater Horizon Settlement Comes With $5.35 Billion Tax Windfall.

* Offshoring By 29 Companies Costs Illinois $1.2 Billion Annually.

* Wealth Doesn't Trickle Down - It Just Floods Offshore, Research Reveals.

* Government Agencies Allow Corporations To Write Off Billions In Federal Settlements.

* The Gang Of 62 Vs. The World.

* How The Maker Of TurboTax Fought Free, Simple Tax Filing.

* $1.4 Trillion: Oxfam Exposes The Great Offshore Tax Scam Of U.S. Companies.

* How Barclay's Turned A $10 Billion Profit Into A Tax Loss.

* Wall Street Stock Loans Drain $1 Billion A Year From German Taxpayers.

* German Finance Minister Cries Foul Over Tax Avoidance Deals.

* Prosecutor Targets Commerzbank For Deals That Dodge German Taxes.

* A Schlupfloch Here, A Schlupfloch There. Now It's Real Money.

* How Milwaukee Landlords Avoid Taxes.

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Previously in the Panama Papers:
* The Panama Papers: Remarkable Global Media Collaboration Cracks Walls Of Offshore Tax Haven Secrecy.

* The Panama Papers: Prosecutors Open Probes.

* The [Monday] Papers.

* Adventures In Tax Avoidance.

* Mossack Fonseca's Oligarchs, Dictators And Corrupt White-Collar Businessmen.

* Jonathan Pie, TV Reporter! They're All In It Together.

* Meet The Panama Papers Editor Who Handled 376 Reporters In 80 Countries.

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Previously in the carried interest loophole:

* Patriotic Millionaires Vs. Carried Interest.

* The Somewhat Surreal Politics Of A Private Equity Tax Loophole Costing Us Billions (That Obama Refused To Close Despite Pledging To Do So).

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Comments welcome.



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Posted on October 7, 2016


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