U.S. companies with business overseas do keep some profits in offshore accounts, where it isn’t subject to U.S. corporate taxes until it is repatriated to this country. The profits are declared indefinitely, or permanently, reinvested, which means the companies say they will reinvest the money abroad.
If a U.S. company does bring the money back to the United States, it would be “subject to the U.S. tax rate of 35 percent minus a tax credit equal to whatever taxes the company paid to foreign governments,” the Institute on Taxation and Economic Policy explains in a March report on this issue.
We also asked ITEP, a nonprofit that partners with the left-leaning Citizens for Tax Justice, about the $5 trillion figure, which Trump has used before. ITEP Senior Fellow Matthew Gardner told us in an email: “I have never seen an estimate as high as $3 trillion, and the $5 trillion number seems impossibly high.”
ITEP’s estimate is for Fortune 500 companies, but the independent research firm Audit Analytics has a database for all companies that file with the Securities and Exchange Commission. Don Whalen, the firm’s director of research, told us that as of today, there were $2.8 trillion in corporate profits indefinitely reinvested. Read more