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Monday, July 25, 2011

Sullivan: Foreign Tax Profits of the Top 50 U.S. Companies

Tax Analysts Martin A. Sullivan (Tax Analysts) has published Foreign Tax Profits of the Top 50 U.S. Companies, 132 Tax Notes 330 (July 25, 2011):

In 2010 America’s 50 most profitable companies generated nearly $600 billion of profits before taxes —38% of all U.S. profits. The average effective corporate tax rate reported to shareholders was 26%. Foreign profits comprised 50% of worldwide profits, and the average foreign effective tax rate was 25%. These 50 firms accumulated a total of $681 billion in undistributed foreign profits for which they have not booked any U.S. tax liability. The WIN America coalition is seeking a repatriation holiday to bring that $681 billion back to the United States.

Of those 50 companies, seven are listed as supporters on the WINAmerica coalition website: Apple, Cisco Systems, Devon Energy, Google, Microsoft, Oracle, and Pfizer. These seven companies had a total of $164 billion in accumulated undistributed foreign profits. On average, their foreign effective tax rate was 12%.

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Another holiday on repatriation of foreign earnings is a bad idea. Lowering the US corporate tax rate, relative to the rest of the civilized world, is a good idea. Unfortunately sound tax policy is held hostage to the debt ceiling debate.

Posted by: Jake | Jul 25, 2011 4:10:58 PM