U.S. companies booked 61 percent of foreign earnings in just 10 low-tax countries in 2014, according to the Institute on Taxation and Economic Policy (ITEP). In five of those countries — Bermuda, the Cayman Islands, the British Virgin Islands, the Bahamas and Luxembourg — American businesses claimed profits that exceeded the value of the nation’s gross national product.
Anyone looking at tax reform now knows that Republican majorities in the House and Senate plan to spark economic growth by cutting the U.S. corporate tax rate from 35 to 20 percent. What they may not grasp is how much this strategy depends on coaxing corporations to change course on tax havens. …
The institute recently reported that 367 of the nation’s Fortune 500 companies, including at least 12 from Minnesota, operate in one or more tax havens.
“Big chunks of these profits weren’t earned where companies said they were earned,” said Matt Gardner, a senior fellow at ITEP.
Whether the House or Senate tax plans have the power to inspire companies to invest more in America is unclear. Read more