By Meagan Clark
It’s impossible to know exactly how much Apple has saved in taxes over the past three decades by shipping profit through Ireland, said Rebecca Wilkins, a senior counsel at Washington, D.C.-based think tank Citizens for Tax Justice. "Their 10-K reports what they have in total in offshore cash but doesn’t break it down by country," she told International Business Times. "They only have to break it out from U.S. and non-U.S. cash."
CTJ in the News
By Meagan Clark
By Ian Reifowitz
A study by Citizens for Tax Justice examined the most profitable 288 of the Fortune 500 companies, the 288 that turned a profit in each year between 2008 and 2012. These "corporate tax dodgers" paid an effective tax rate of only 19.4 percent. Most interestingly, given the argument that our corporate tax rate forces inversions and puts U.S. companies at a competitive disadvantage compared to their overseas counterparts, the CTJ study found that "of those corporations in our sample with significant offshore profits, two thirds paid higher corporate tax rates to foreign governments where they operate than they paid in the U.S. on their U.S. profits." Damn those stubborn facts.
It's true that the statutory tax rate—including state and local taxes—is close to 40 percent, the highest among the developed world. But U.S. companies apply a long list of tax credits, subsidies, loopholes and other giveaways, so most of them pay much less than the top rate. Some, according to an analysis by Citizens for Tax Justice, have figured out how to pay no tax at all.
Total corporate federal taxes fell to about 12 percent of profits from U.S.-based activity in 2011, according to a Congressional Budget Office report. In a separate study, the CBO found that the average tax rate in 2011 among developed countries was 3 percent of gross domestic product—compared with 2.3 percent of GDP in the U.S.
Currently the tax rate is 35% to bring overseas cash back, the full-corporate rate. Fortune 500 corporations have stashed nearly $2 trillion in offshore accounts, says think tank Citizens for Tax Justice. And tech companies have some of the biggest tax hoards.
In fact, as the liberal group Citizens for Tax Justice argued this week, the federal tax exemption amounts to just a fraction of the public money that state and local governments often give to professional sports teams to help build stadiums.
By Emily Stephenson
Citizens for Tax Justice, a lobby group that has floated a similar idea, said individuals pay an “exit” tax on unrealized capital gains if they renounce their U.S. citizenship. The inversion plan is similar and would remove a “significant incentive” for companies to move abroad, the group argued in a paper earlier this month.
By Steve Wamhoff, CTJ Legislative Director
If the all-American fast food chain Burger King, with its thousands of restaurants in the United States, can claim to be a foreign company for tax purposes, our corporate tax system is in real trouble.
The crisis of corporate inversions is now apparent even to those who aren’t connected to the boring details of tax policy. The specifics of inversions are clear to everyone: A U.S. corporation merges with a smaller foreign company and claims the foreign country as its address, even though the vast majority of the business continues to be carried out and managed in the U.S. The public outrage is so apparent that Walgreen Co. backed off its plans to invert.
Every now and then something happens — a Senate investigation into Apple’s tax dodging, Burger King’s plan to become Canadian — that demonstrates that our corporate income tax is very ill. Every time, pundits debate how to cure this disease, offering various tax reform proposals.
And every time, a few suggest we shoot the patient, that is, repeal the corporate income tax, which is expected to raise $4.6 trillion over the coming decade.
I finished reading Steve Robinson’s Aug. 30 column, “Learn Burger King’s lesson – drop the corporate income tax,” dried my eyes and vowed to write my congressional representatives, demanding they do something to rid our “uncompetitive tax code” of the “rotten fruit” that prevents America’s corporations from making an honest buck without having to move their headquarters to foreign countries to survive.
Imagine having to pay a corporate tax rate of almost 40 percent, the highest rate in the industrialized world. It turns out that imagining is exactly what has to be done.