Money

US Corporations Kept $206 Billion in Profits Offshore in 2013

| by Michael Allen

U.S. corporations added $206 billion to their offshore profits in low-tax countries in 2013.

Bloomberg News studied the securities filings from 307 corporations and found that Microsoft, Apple and IBM added $37.5 billion to the total increase.

American corporations save money by keeping tons of cash in their foreign subsidiaries, instead of paying taxes to rebuild America's crumbling infrastructure and re-investing the money in American jobs.

“The loopholes in our tax code right now give such a big reward to companies that use gimmicks to make it look like they earn their profits offshore,” Dan Smith, of the U.S. Public Interest Research Group, told Bloomberg News.

Some of the more popular countries to stash corporate profits include Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland.

The Washington Post reported in 2013:

$1.7 trillion in foreign earnings is being held overseas by more than 1,000 U.S. firms, yet to be taxed by the federal government.

Companies have also found ways to shift their income across national boundaries, roving from country to country in search of the lowest tax burden. Ed Kleinbard, a tax professor at the University of Southern California Gould School of Law, has dubbed these movable earnings “stateless income.”

American corporations refuse to bring their $1 trillion back to the U.S. until the corporate tax rate is dropped from the current level of 35 percent, which is less than it was in 1971 when it was 48.

Sources: The Washington Post and Bloomberg News