Lisa Ritland
Study: 70% of Fortune 500 Companies Used Tax Havens in 2013
Media Contacts
30 companies booked more cash offshore than others combined
CoPIRG Foundation
Tax loopholes encouraged more than 70 percent of Fortune 500 companies – including Colorado’s Liberty Global and Western Union – to maintain subsidiaries in offshore tax havens as of 2013, according to “Offshore Shell Games,” released today by the CoPIRG Foundation and Citizens for Tax Justice. Collectively, the companies reported booking nearly $2 trillion offshore for tax purposes, with just 30 companies accounting for 62 percent of the total, or $1.2 trillion.
“Our tax code is broken, and it’s hurting the public,” said Lisa Ritland of the CoPIRG Foundation. “We’ve made it too easy for American multinationals to dodge taxes by setting up shell companies in tax havens. This hurts all Colorado taxpayers. We simply shouldn’t allow companies that use Colorado roads and benefit from our education system and large consumer market to take a free ride at the expense of the rest of us.”
“The loopholes in America’s corporate tax have grown so outrageous that our policymakers should be embarrassed,” said Steve Wamhoff, CTJ legislative director. “The data in this report demonstrate that a huge portion of the supposedly ‘offshore’ profits are likely to be U.S. profits that are manipulated so that they appear to be earned in countries like Bermuda or the Cayman Islands where they won’t be taxed. Policymakers should close the loopholes that make this manipulation possible.”
Every year, offshore tax loopholes used by U.S. corporations cost Colorado $300 millionin state tax revenue. That money would be enough topay the salary for six thousand additional school teachers based on the average state school teacher salary.
The CoPIRG Foundation’s new study shows that while most very large companies use tax havens, a smaller subset is most aggressive about using offshore tax havens to avoid taxes.
Key findings of the report include:
- At least 362 Fortune 500 companies operate subsidiaries in tax haven jurisdictions, as of 2013. All told, these companies maintain at least 7,827 tax haven subsidiaries. The 30 companies with the most money booked offshore for tax purposes collectively operate 1,357 tax haven subsidiaries.
- Approximately 64 percent of the companies with any tax haven subsidiaries registered at least one in Bermuda or the Cayman Islands. The profits that American multinationals collectively claim to earn in these island nations’ totals 1,643 percent and 1,600 percent, respectively, of each country’s entire yearly economic output.
- The 30 companies with the most money booked offshore for tax purposes collectively hold nearly $1.2 trillion overseas. That is 62 percent of the nearly $2 trillion that Fortune 500 companies together report holding offshore.
- Only 55 companies disclose the amount they would expect to pay in U.S. taxes if they didn’t report profits offshore for tax purposes. All told, these 55 companies would collectively owe $147.5 billion in additional federal taxes, equal to seven times the size of Colorado’sbudget. The average tax rate the 55 companies currently pay to other countries on this income is a mere 6.7 percent, implying that most of it is booked to tax havens.
Companies headquartered in Colorado that were highlighted by the study include:
- Liberty Global maintains 104 subsidiaries in offshore tax havens, including five in the Cayman Islands, nine in Luxembourg, and one in Cyprus. The company ranks 11th for the greatest number of tax haven subsidiaries and reports having $8 billion booked offshore for tax purposes.
- Western Union maintains 46 subsidiaries in offshore tax havens, including 13 in Bermuda, five in Luxembourg, and one in Barbados. The company reports having $5 billion booked offshore, but does not disclose their estimated tax bill on those profits were they not booked offshore.
- CH2M Hill maintains two tax haven subsidiaries – one in Bermuda and one in the Netherlands. The company reported holding $266 million in cash offshore for tax purposes but does not disclose their estimated tax bill on those profits were they not booked offshore.
“Steamboat Hat Shop does its small part to make our community better,” said Matt Royer, co-owner of the local hat shop in Steamboat Springs and one of the 334 Colorado business owners who have signed a letter calling on Colorado’s congress members to close these loopholes. “Our taxes help pay for roads, bridges, schools, and other public services that my business and my customers depend on. We should close the loopholes that let some multinationals skip out on paying their fair share for the services that helped them make their profits.”
The report concludes that to end tax haven abuse, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore loopholes, strengthen tax enforcement, and increase transparency.