Citizens for Tax Justice, "Offshore Shell Games 2014,"
The Use of Offshore Tax Havens by Fortune 500 Companies, June 2014, 56 pp
Many large U.S.-based multinational corporations avoid paying U.S. taxes by using accounting tricks to make profits made in
America appear to be generated in offshore tax havensócountries with minimal or no taxes. By booking profits to subsidiaries registered in tax havens, multinational corporations are able to avoid an estimated $90 billion in federal income taxes each year. These subsidiaries are often shell companies with few, if any employees, and which engage in little to no real business activity.
Congress has left loopholes in our tax code that allow this tax avoidance, which forces ordinary Americans to make up the difference. Every dollar in taxes that corporations avoid by using
tax havens must be balanced by higher taxes on individuals, cuts to public investments and public services, or increased federal debt.
Companies can avoid paying taxes by booking profits to a tax haven because U.S. tax laws allow them to defer paying U.S. taxes on profits they report are earned abroad until they "repatriate" the money to the United States. Corporations receive a dollar-for-dollar tax credit for the taxes they pay to foreign governments in order to avoid double taxation. Many U.S. companies game this system by using loopholes that let them disguise profits legitimately made in the U.S. as "foreign" profits earned by
a subsidiary in a tax haven.
more at www.foreffectivegov.org