A recently released study showed that many of America’s 500 largest companies are holding over $2.1 trillion in collected profits overseas. The companies are keeping the money in foreign lands in order to avoid taxes that are mandated by the United States government.
Of that $2.1 trillion, just 30 firms hold nearly two-thirds of that amount.
If the companies returned the money to the United States, they would reportedly have to pay an estimated $620 billion in taxes.
According to the study, the companies were paying an average tax rate of 6% overseas. In the United States, they would be required to pay a tax rate of 35%.
The study was conducted by two non-profit organizations: the Citizens for Tax Justice and the United States Public Interest Research Group Education Fund.
Nearly 75% of the companies on the Fortune 500 list, representing the largest American companies in terms of gross revenue, keep money in countries such as Bermuda, Ireland, Luxembourg, and the Netherlands in order to avoid paying American taxes.
In order to conduct the study, researchers made use of the financial filings of the companies from the Securities and Exchange Commission.
Major technology company Apple reportedly holds more than $181 billion overseas. This is larger than any other company in the United States. If Apple were to return this money to America, they would owe approximately $59 billion in United States taxes.
Other companies with a staggering amount of offshore capital include General Electric with $119 billion, Microsoft with $108 billion and Pfizer with $74 billion.
The study read, “At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014. All told these 358 companies maintain at least 7,622 tax haven subsidiaries.”
As one might expect, the study expressed displeasure with the fact that such a massive amount of American money was not being used in the economy of the United States.
“Congress can and should take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets,” the study stated.
Unless the government takes some kind of action, one could reasonably expect that companies will continue this practice in order to save money.
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