Wednesday, February 13, 2013
The Bay Citizen, Silicon Valley Firms Shelter Assets Overseas, Slash U.S. Tax Bill:
The largest tech companies in the Bay Area have avoided paying federal taxes on more than $225 billion they have accumulated through foreign subsidiaries, documents filed with the Securities and Exchange Commission show.
By sheltering their assets overseas, Silicon Valley companies such as Apple, Google, eBay and Hewlett-Packard are able to reduce their annual taxes in some cases by billions of dollars, according to a Center for Investigative Reporting and Bay Citizen analysis of the 50 largest firms’ financial statements filed in 2012.
Widespread tax avoidance by some of California’s most prominent companies has contributed to federal revenue shortfalls as President Barack Obama and Congress consider whether to cut government programs. Some lawmakers say the tax code disproportionately favors powerful companies at the expense of other taxpayers.
“What it demonstrates is that tech firms in particular have very low worldwide rates, and their demands for a more competitive U.S. tax system ring hollow,” said Edward Kleinbard, a tax law professor at the University of Southern California and former chief of staff for the congressional Joint Committee on Taxation. “In fact, the U.S. tax system subsidizes them, and a more neutral tax system would require tech firms to pay substantially more taxes.” ...
Five companies – Cisco Systems, Apple, Hewlett-Packard, Google and Oracle – accounted for more than two-thirds of the $225 billion in accumulated foreign earnings as of Dec. 31, 2012. Tech companies that relied on foreign income to reduce their taxes include:
- Apple, which reported $40.4 billion in holdings overseas and had an effective global tax rate of 12.6 percent over the past three years
- eBay, which reported $10 billion overseas and had an effective tax rate of 15.3 percent over the past three years
- Google, which reported $24.8 billion overseas and had an effective tax rate of 17.6 percent over the past three years
- Yahoo, which reported $3.2 billion overseas and had an effective tax rate of 17.9 percent over the past three years
- Cisco, which reported $41.3 billion overseas and had an effective tax rate of 20.9 percent over the past three years