Saturday, June 7, 2014
New York Times: The Islands Treasured by Offshore Tax Avoiders, by Floyd Norris:
Did you know that United States companies earned $129 billion in 2010 in three small groups of islands?
That is what they told the IRS they earned in Bermuda, the Cayman Islands and the British Virgin Islands. ...
Assuming you believe those figures, the productivity of workers in those countries is amazing. On average, United States companies had profits of $873,611 per person living in those islands.
By contrast, those same companies reported earning $12.6 billion in China, a country with 1.36 billion people. On a per capita basis, that comes to a little more than $9 a person.
Of course, those numbers are nonsense. The United States income tax laws allow companies to claim they earned profits in countries where they actually had few, if any, operations, but where taxes are extremely low.
A report this week by two groups upset about the low effective income tax rate for corporations, the U.S. Public Interest Research Group Education Fund and Citizens for Tax Justice, said that 372 of the companies in the Fortune 500 — generally the 500 United States companies with the highest revenues — reported a total of 7,827 subsidiaries in countries that the groups view as tax havens [Offshore Shell Games 2014:The Use of Offshore Tax Havens by Fortune 500 Companies].
(Hat Tip: Mike Talbert.)