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Corporate America loves tax havens. It’s costing the US more than $100 billion.

Panama City, Panama, a tax haven.
Panama City, Panama, a tax haven.
Joe Raedle/Getty Images

America's biggest companies are not good at paying taxes.

The top 50 companies in the United States – which include Goldman Sachs, Walmart, Apple, and IBM – have concealed more than a trillion dollars offshore in 1,600-plus offshore subsidiary companies while still receiving trillions in federal loans, loan guarantees, and bailout assistance, the nonprofit charity Oxfam claims in a new report released Thursday.

"Corporate tax dodging costs the US an estimated $100 billion each year, a gap that the average American taxpayer would have to shell out an extra $760 to cover," the report said. Oxfam analyzed the largest 50 companies over a period of six years, comparing their reported profits, offshore holdings, and paid taxes.

Apple led among the 50 companies, with $181 billion in offshore holdings spread across three offshore subsidiaries, followed closely by General Electric, which had $119 billion in offshore holdings among 18 offshore subsidiaries while also receiving $27 billion in federal money.

Almost half of all foreign earnings came from five tax havens; the five countries where the tax havens are located only make up 4 percent of the companies' foreign workforces and 7 percent of foreign investment.

This is about what it means to be a good company

The findings follow news of the recently released Panama Papers, a massive document dump revealing the widespread tax-evading practices of the world's elite, and are a glaring example of how pervasive the use of tax havens is in corporate practice.

In the US, the statutory income tax for corporations is usually 35 percent. According to Oxfam's report, only five of the top 50 companies paid the 35 percent tax rate. On average, while earning nearly $4 trillion in profits US multinationals "used offshore tax havens to lower their effective global tax rate to just 26.5 percent," the report found.

Oxfam is making a case that these companies are being hypocritical: Publicly they highlight corporate social responsibility, or invest in making the world a better place on top of their products, yet their tax-dodging efforts are costing both American taxpayers and developing nations. After all, few tax-paying individuals have the resources to dodge their fair share the way corporate entities do.

There is a persistent counterargument to this: If companies pay lower taxes, they may invest more in "socially responsible" practices, whether that means paying healthier salaries or researching how to provide internet access to people in the developing world.

But whatever you make of this kind of evasion, it is large in scale, and the current tax system allows it to happen. Oxfam has called for the US government to close these tax haven loopholes and pass the Stop Tax Haven Abuse Act, which would redefine domestic corporations to include these foreign subsidiaries. The bill was introduced in the House in January 2015 and has not moved forward since.


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