American Corporations Shelter $2.1 Trillion in Offshore Profits, Withholding $620 Billion in U.S. Tax Revenue

Posted Oct. 21, 2015

MP3 Interview with Matthew Gardner, executive director of the Institute on Taxation and Economic Policy, conducted by Scott Harris

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Since well before Ronald Reagan was elected president in 1980, Republican and conservative politicians have railed against corporate taxes, arguing that high U.S. tax rates hurt the American economy and put a damper on the creation of jobs. By statute, profitable corporations are supposed to pay a 35 percent federal income tax rate on their U.S. profits, but in 2010, corporations based in the United States had an effective federal tax rate of just 13 percent on their worldwide income, 17 percent when state and local taxes are included.

Corporations are paying a smaller share of federal tax revenue now than they did in the 1950s, dropping from one-third then to only one-tenth of the total. Meanwhile, corporate lobbyists are stalking the halls of Congress advocating legislation that would lower the U.S. corporate income tax rate from the current 35 percent to 25 percent, leaving middle-income taxpayers to make up the difference in lost revenue.

Now a new study published by Citizens For Tax Justice and the U.S. Public Interest Research Group Education Fund titled, "Offshore Shell Games 2015," reveals that nearly three-quarters of U.S.-based Fortune 500 companies transferred $2.1 trillion in profits to offshore tax havens in 2014. By offshoring their profits these companies avoided paying an estimated $620 billion in federal taxes if they were subject to paying the full rate. Between The Lines' Scott Harris spoke with Matthew Gardner, executive director of the Institute on Taxation and Economic Policy and a contributor to the report, who summarizes the findings and urges Congress to take action on tax reform measures to ensure corporations pay their fair share of taxes.

For more information see the Offshore Shell Games 2015 reportand Report: Close Corporate Tax Loopholes at uspirg.org/reports/usp/offshore-shell-games-2015.

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