March 28, 2017

Corporations Offshore Cash Hoard Grew to $2.6 Trillion in 2016

press release

Fortune 500 Avoiding up to $767 Billion in U.S. Taxes

 U.S. corporations now hold a record $2.6 trillion offshore, a sum that ballooned by more than $200 billion over the last year as companies moved more aggressively to shift their profits offshore, according to a new report, Fortune 500 Companies Hold a Record $2.6 Trillion Offshore, released today by the Institute on Taxation and Economic Policy.

The report’s authors examined Fortune 500 companies’ 2016 financial filings and found that 322 of these companies claim to hold at least some profits offshore. If corporations repatriated these profits to the United States, the authors estimate the companies could collectively owe as much as $767 billion in federal taxes.

“Congress is gearing up for the biggest tax overhaul in the last three decades, and ending the abuse of offshore tax havens should be a high priority,” said Matt Gardner, a senior fellow at ITEP. “But so far, all indications are that Congress plans to move to a territorial system, which would do nothing to stop companies from shifting their profits into tax havens. Legislation that doesn’t end the offshore tax avoidance charade doesn’t deserve to be called reform.”

The report finds that companies in recent years have accelerated the pace at which they are stashing money offshore. This could be due to their intent to pursue a corporate inversion (a legal maneuver that would allow them to avoid taxes on their offshore stash) or their anticipation that Congress will eventually shower them with a tax holiday on their offshore cash.

Ninety-two of the companies surveyed in this report increased their declared offshore cash by at least $500 million each in the last year alone. Thirty-four companies moved at least $2 billion offshore in 2016.  And six particularly aggressive companies each increased their permanently reinvested foreign earnings by more than $5 billion in the past year. These include Apple, Intel, Microsoft, Gilead Sciences, Johnson and Johnson, and Cisco Systems.

Over the last three years, corporations offshore cash hoard has grown by $500 billion.

To read the report, go to: http://itep.org/itep_reports/2017/03/fortune-500-companies-hold-a-record-26-trillion-offshore.php





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