Paul L. Caron

Thursday, July 28, 2016

Visualizing How Fortune 500 Companies Use Offshore Tax Havens, This Interactive Calculator Shows How Much Tax Havens Are Costing America:

Many multinational corporations use their global reach, and a fair degree of high-tech accounting, to shift their assets, profits—and taxes due—to so-called offshore tax havens. These countries have minimal corporation tax rates, drastically reducing the amount of tax these multinationals have to pay. Below is a list of the 30 U.S. companies with the biggest offshore holdings. Our calculator gives you an idea of how much more money Uncle Sam would make if all that income were declared in the U.S. 

Tax-havens-2 (2)

The calculator above lists the aforementioned 30 Fortune 500 companies with the biggest offshore holdings. They are ranked by the total value of their subsidiaries in offshore tax havens, in descending order.

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Why that dirty greedy Walmart, oh wait...

Posted by: Dale Spradling | Jul 28, 2016 3:35:02 PM

It'd be interesting to compare this tax evasion to political giving by party.

Posted by: Michael W. Perry | Jul 28, 2016 6:42:59 PM

It is interesting to compare Apple to Caterpillar. Not only does Apple’s IP give it a near monopoly powers, but it can outsource profits almost at will. Caterpillar is an industrial relic (but a damn good one) facing extreme worldwide competition due to almost zero IP protection. Moreover, the majority of Caterpillar’s profits are sourced to the US. It is a classic Alvin Toffler Second Wave versus Third Wave. I’m not blaming Apple. I’m sure Caterpillar would do the same thing, if it could. But, the US tax code clearly gives Apple a head start over Caterpillar.

I can’t think of a better snapshot of why we MUST overall our corporate tax structure. Some call for flatter rates, a territorial system, stricter BEPS, or some combination of the above. Frankly, I think all these proposals will just make things worse. We can’t do simple anymore.

Here is my Occam’s razor proposal. First, the IRS should determine the long-term average ETR of the Fortune 500. (They are the only ones who have the real info. Everything else would be a guess.) I would be surprised if the real number is much above 18%. Next, congress imposes this rate against the GAAP (book) income of all publically traded companies. No timing differences. No NOL carrybacks. No nothing.

Apple will hate it. Because I’m guessing their ETR is below 18%. Caterpillar will probably like it for the opposite reason. I like it because it makes the tax code neutral. Anytime the government tries to pick winners and losers, it only makes things worse.

Posted by: Dale Spradling | Jul 29, 2016 6:19:17 AM

It is interesting that all of these companies seem to keep an identical percentage of their money on offshore accounts. Is there a tax reason for that?

Posted by: Man_in_PA | Jul 29, 2016 9:33:10 AM

when I add up all the deferred tax, I get $420 Billion. The USA 2015 budget was 3.8 Trillion. All that extra money would fund the government for about 40 days. What would changing this solve?

Posted by: Stan Wright | Jul 29, 2016 9:53:16 AM

Looks like these large businesses are in the driver's seat, not the U.S. Government, when it comes to determining who pays the cost of running the Government. They will sit and wait for "favorable" tax climate before repatriating their huge earnings heald abroad.

Posted by: Old Ruster from JD Junkyard | Jul 29, 2016 4:04:34 PM

Actually, Stan, it's even less signficant than funding the federal gov't for X number of days. That amount, if collected, would mostly fill the current federal budget deficit... for about a year. The federal government could stop borrowing to fund itself, but after that year, it would be back to business as usual...

Posted by: MM | Jul 29, 2016 7:19:46 PM