US firms’ $1.6 trillion tax haven stash [Infographic]
The 50 largest US companies, including Apple, Microsoft and Wal-Mart have parked $1.6 trillion in offshore havens to reduce their tax burden, and Donald Trump’s reform plans are predicted to make matters worse, according to a new Oxfam report.
The report, Rigged Reform, reveals that big US companies are increasing their use of tax havens and boosting their investment in political lobbying in order to push for even greater tax breaks.
It warns that President Trump's proposed tax reforms will "further rig American tax laws in favour of the rich and powerful and intensify the destructive global race to the bottom on corporate tax - at the expense of poor communities in the US and around the world".
The report found:
- The 50 largest US companies used a secretive network of 1,751 subsidiaries in tax havens to stash about $1.6 trillion offshore in 2015. The companies reported an additional 143 tax haven subsidiaries and $200 billion in offshore earnings compared to 2014
- Tax reforms proposed by President Trump and leaders in Congress could give these 50 companies a windfall of between $312 and $327 billion on the profits they hold offshore, in addition to massive financial benefits resulting from a dramatic cut in corporate rates and other more favourable tax treatments
- The 50 companies spent $2.5 billion lobbying the US government between 2009 and 2015. An estimated $352 million was spent lobbying on tax issues - helping to secure over $423 billion in tax breaks. Oxfam estimates that for every $1 these companies spent lobbying on tax, they received an estimated $1,200 in tax breaks
- Five companies - General Electric, Verizon Communications, Comcast, AT&T and Exxon Mobil - account for approximately a quarter of all lobbying on tax by the top 50 companies
Oxfam's Ana Arendar said: "These companies have deepened their use of tax havens and increased efforts to build influence to push for even greater tax breaks than they already have.
"Corporate tax dodgers cheat the US out of approximately $135 billion in unpaid tax revenues every year and poor countries out of an estimated $100 billion annually."
Oxfam said the proposal to cut US corporate tax rates from 35 per cent to 15 per cent will also feed into "a destructive race to the bottom" that has seen countries slashing corporate tax rates in recent years.
The proposed Border Adjustment Tax, which will increase taxes on imports, is likely to harm poor consumers in the US and poor people around the world, the charity said.
The report follows research last December which revealed that four UK-linked tax havens were among the world's worst 15.
Oxfam also said that despite the UK government's progress in clamping down on businesses who avoid paying their fair share of tax, the UK's Crown Dependencies and Overseas Territories continue to operate as tax havens.
Oxfam is calling on the UK government to pass an amendment to the Criminal Finances Bill that would compel British Overseas Territories to publish registers revealing the owners of companies set up there.
Ms Arendar said: "This report shows how tax avoidance continues to help the rich get richer at the expense of the poor. Governments, including the UK and the US, must work together to ensure all big businesses pay their fair share."