“New York Times” Op-Ed Cites Bermuda
By encouraging multinational corporations to use accounting techniques which allow them to shift profits to overseas jurisdictions like Bermuda, the US tax code invites corporate tax avoidance says Chye-Ching Huang in a “New York Times” op-ed piece published yesterday [Apr. 11]
A federal tax policy analyst with the Center on Budget and Policy Priorities non-profit think tank in Washington DC, Ms Huang called for lawmakers to crack down on corporations which off-shore their profits to sidestep the US Internal Revenue Service.
“The extent of this profit shifting was made clear by a recent Congressional Research Service analysis that found that US multinationals reported 43 percent of their overseas profits came from tax havens like Bermuda, even though few of their actual foreign investments [seven percent] or foreign workers [four percent] were in those countries,” she said in a piece entitled ’An Unneeded Gift to Corporations.’
“… Elements of the US tax code help tax havens thrive, while draining revenues and creating a bias against domestic firms and firms that don’t have access to sophisticated tax expertise “An Unneeded Gift to Corporations.”
“Policymakers can start to level the playing field by no longer allowing firms to take immediate deductions on expenses related to tax-deferred foreign profits, as the president has proposed.”
Offshore tax avoidance has become a hot-button issue in the US after a September US Senate report alleged Apple, Google and Microsoft moved profits overseas in an effort to legally dodge US taxes.
The use of what it called ”foreign tax havens” — including Bermuda — is costing the US $150 billion per year in the form of lost tax revenues according to academic studies cited in a report from Washington’s US Public Interest Research Group [PIRG] released last Thursday [Apr. 4].
Corporations account for $90 billion of the lost revenue, and individuals make up the other $60 billion.
Overall, US companies are now holding a record $1.9 trillion of their profits abroad, according to a recent Bloomberg report.
