US companies avoided over $700 billion in taxes in 2015: Study
The largest US corporations have managed to hold trillions of dollars in profits offshore in order to avoid billions of dollars in taxes, according to a new study by a group of researchers.
Fortune 500 companies have managed to shelter $2.5 trillion in profits offshore to avoid paying about $717 billion in taxes to the US government, according to an exhaustive study released on Tuesday.
The study shows that one of the practices that has become standard for Fortune 500 companies is to create subsidiaries in a country that has no income or corporate tax.
The authors of the study, which include Citizens for Tax Justice and the Institute on Taxation and Economic Policy, examined the tax filings of the Fortune 500 for 2015 and found a whopping 73 percent of the companies “maintained subsidiaries in offshore tax havens.”
According to the study, 367 of the companies on the Fortune 500 list have at least one of these subsidiaries.
The researchers calculated that if all the Fortune 500 companies paid taxes on their sheltered profits, the US government would receive an astonishing $717.8 billion in revenue.
To put that number in context, the federal budget deficit last year was $438 billion.
"The most popular tax haven among the Fortune 500 is the Netherlands, with more than half of the Fortune 500 reporting at least one subsidiary there,” the report said.
"Approximately 58 percent of companies with tax haven subsidiaries have set up at least one in Bermuda or the Cayman Islands — two particularly notorious tax havens. The profits that all American multinationals — not just Fortune 500 companies — collectively claimed they earned in these two island nations according to the most recent data totaled 1,884 percent and 1,313 percent of each country's entire yearly economic output, respectively."
American technology companies Apple and Microsoft, as well as pharmaceutical giant Pfizer, were the three biggest tax avoiders, according to the authors.
The study comes on the heels of a report that revels US Republican presidential nominee Donald Trump may have avoided federal income taxes for up to 18 years.
The business mogul declared a $916 million loss on his 1995 income tax returns and the tax deduction was so substantial that could have allowed him to legally avoid paying taxes for years to cancel out the loss, records obtained by The New York Times show.
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