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Top 50 US Companies Stash $1.6 Trillion Offshore

By Oxfam

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Current “Reform” Proposals Likely to Make Tax Dodging Even Worse

The 50 biggest US companies, including global brands such Pfizer, Goldman Sachs, GE, Chevron, Walmart, and Apple, have $1.6 trillion stashed offshore according to Oxfam America, a $200 billion increase in a single year.

In a new report based on corporate financial, lobbying, and investor disclosures released ahead of Tax Day, Oxfam revealed that the 50 largest US companies relied on an opaque and secretive network of at least 1,751 subsidiaries in tax havens to avoid paying their fair share of taxes. Oxfam also warned that reforms proposed by President Trump and Congressional leaders will only further rig the rules in favor of the rich and powerful, deepen the inequality crisis, and harm poor families in the US and in developing countries worldwide.

“As Americans prepare for the yearly ritual of filing their returns and sending Uncle Sam a check, the 50 largest US companies are hoarding more than a trillion dollars offshore that could provide much-needed funds to fight poverty and inequality here and around the world,” said Robbie Silverman, Senior Advisor for Oxfam America and one of the authors of the report. “While President Trump was elected on the promise to fix the rigged political and economic system, his proposals will only enrich powerful corporations and enable special interests to game the tax code at the expense of ordinary taxpayers and small businesses.”

The report, which updates Oxfam’s analysis from a similar report last year, reveals that the 50 largest US companies have deepened their use of tax havens and boosted their investments in building political influence to push for even greater tax breaks than they already enjoy. Even as these 50 companies earned over $4.2 trillion in profits globally, they used offshore tax havens to lower their effective overall tax rate to just 25.9% according to the most generous estimate of their tax payments, well below the statutory rate of 35% and even below average levels paid in other developed countries. Since 2009, these 50 companies alone have spent $2.5 billion in federal lobbying—almost $50 million for every member of Congress.  Oxfam estimates that for every $1 these companies spent lobbying on tax issues, they received an estimated $1,200 in tax breaks.

“Every year rigged tax rules cost Americans approximately $135 billion in corporate tax dodging and sap an estimated $100 billion from poor countries—revenue that should go towards building schools, bridges and hospitals,” continued Silverman. “The losers in this rigged game are small businesses, working families, and the poor who cannot deploy armies of lobbyists to preserve their favorite tax loophole.”

The report does not accuse any of the companies of acting illegally—rather, Oxfam’s analysis demonstrates how the current tax system permits companies to dodge hundreds of billions of dollars of tax within the bounds of the law.

Instead of supporting straightforward reforms to prevent large companies from gaming the system, President Trump and leaders in Congress are pitching “reform” that would provide massive tax breaks to US companies that have trillions stashed offshore, give giant new tax breaks to large, profitable companies, and dramatically reshape the way US companies are taxed with terrible implications for poor countries.

Oxfam estimates that the top 50 US companies would stand to gain between $312-327 billion from the repatriation holidays proposed by President Trump and the House GOP. Just 4 companies—Apple, Pfizer, Microsoft and General Electric—together could potentially pocket as much as $132 billion in new tax breaks from this single policy change.

The report also reveals that the Border Adjustment Tax, proposed by the House GOP, will harm poor and middle class Americans and could cost poor countries more than what the US spends on poverty-focused foreign aid. As a direct result of this proposal, poor countries could face rapidly increasing costs in servicing their debts, which would drain resources needed for schools, hospitals and other basic services that help pull their citizens out of poverty.

The tax reform plans, which will cost the US trillions of dollars over the next decade, must also be considered and understood in the context of the Trump Administration’s proposals to dramatically slash the federal budget, in part to help pay for tax cuts for the wealthy. President Trump’s budget would severely cut or abolish programs that provide low-income Americans with affordable housing, job training, energy assistance, rehabilitated homes in neighborhoods hard-hit by foreclosures, and food delivery to homebound seniors. At a time of unprecedented global crisis, with 65 million people forced to flee their homes and up to four famines looming, the cuts would also devastate US leadership to save lives and help the world’s poorest and most vulnerable.

Oxfam calls on Congress to go back to the drawing board on its tax reform plans and start over with measures that do not further entrench the inequality crisis. Congress must also work to enable cooperation with other countries that are struggling to prevent tax abuse rather than compete with other nations in a mutually destructive race to the bottom. The Corporate Tax Dodging Prevention Act and the Stop Tax Haven Abuse Act are just two reasonable measures that would simplify the tax code and ensure companies pay their fair share.

“A fair and effective tax system is the lifeblood of an efficient and well-functioning government, allowing for investments in basic services like schools, hospitals, roads, first responders, social safety nets and other vital public services that can address poverty and ensure a thriving business climate,”  said Silverman. “The vast sums that companies have stashed in tax havens should be fighting poverty and rebuilding America’s infrastructure, not hidden in Panama, Bahamas, or the Cayman Islands.”

/ENDS

Editor’s notes: The Oxfam report analyzed the tax practices between 2009-2015 of the 50 largest public companies in the US according to the Forbes 2000 list: Allergan, Alphabet (Google), American Express, American International Group (AIG), Amgen, Apple, AT&T, Bank of America, Berkshire Hathaway, Boeing, Capital One Financial, Chevron, Cisco Systems, Citigroup, Coca-Cola, Comcast, CVS Health, Dow Chemical, Exxon Mobil, Ford Motor, General Electric, General Motors, Gilead, Goldman Sachs, Home Depot, Honeywell International, IBM, Intel, Johnson & Johnson, JPMorgan Chase, Medtronic, Merck, MetLife, Microsoft, Mondelez, Morgan Stanley, Oracle, PepsiCo, Pfizer, Phillips 66, Procter & Gamble, Prudential Financial, United Technologies, UnitedHealth Group, US Bancorp, Verizon Communications, Walgreens, Wal-Mart, Walt Disney, and Wells Fargo.

 

Oxfam is a global movement of people working together to end the injustice of poverty. With 70 years of experience in more than 90 countries, Oxfam takes on the big issues that keep people poor: inequality, discrimination, and unequal access to resources including food, water, and land. We help people save lives in disasters, build stronger futures for themselves, and hold the powerful accountable. Join us. www.oxfamamerica.org

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