It’s tax season in the US — and not just because Americans are scrambling to find their W2s and expense receipts before the IRS filing deadline on April 18.
Less than two weeks after the Panama Papers, a yearlong investigation by hundreds of news organizations around the world, cast a bright light on the world of offshore tax havens, a new report from anti-poverty NGO Oxfam reveals how much money the 50 largest US corporations have stashed away overseas.
It’s a lot: $1.4 trillion.
The Panama Papers leak has caused trouble for the world’s heads of state, politicians and their associates, business leaders and celebrities. But it hasn’t caused much trouble for wealthy Americans, who are more likely to stash their cash in stateside tax havens like Delaware, Nevada and Wyoming, or in Bermuda, Singapore, and the Cayman Islands.
If the data leak had come from one of those places, the political fallout might have hit American elites a little closer to home.
The Oxfam report, “Broken at the Top,” does just that.
“As Americans rush to finalize tax returns, multinational corporations that benefit from trillions in taxpayer-funded support are dodging billions in taxes,” Raymond C. Offenheiser, President of Oxfam America, said in a statement. “The vast sums large companies stash in tax havens should be fighting poverty and rebuilding America’s infrastructure, not hidden offshore in Panama, [the] Bahamas, or the Cayman Islands.”
The report scrutinized publicly available tax and revenue data for the 50 largest US companies. Together, Oxfam found, those companies are holding $1.4 trillion in offshore tax havens, funneled through about 1,600 disclosed subsidiaries.
The companies with the most money held overseas are: Apple ($181 billion), General Electric ($119 billion), and Microsoft ($108 billion). Pfizer, IBM, Merck, Johnson & Johnson, Cisco Systems, Exxon Mobil, Alphabet (Google) and Procter & Gamble round out the rest of the top 10.
The $1.4 trillion is just the beginning of the story, though.
Oxfam estimates that corporate tax avoidance costs the US about $100 billion in tax revenue every year. Each American taxpayer would have to pay an additional $760 per year to cover that cost. These companies aren’t just shielding tax revenue from the government — they’re taking money from the government (and taxpayers) in the form of federal loans, loan guarantees and bailouts. Between 2008 and 2014, for every $27 of these funds received, the companies paid $1 in federal taxes.
None of this is illegal under current tax laws. But it could be, if US lawmakers decide that current regulations disproportionately benefit wealthy Americans and corporations at the expense of everyone else.
Oxfam’s report comes a day after the US Government Accountability Office released its findings that between 2006 and 2012, at least two-thirds of active US corporations paid zero federal income tax. Among “large corporations” (defined as companies with at least $10 million in assets), only 19.5 percent paid federal income taxes in 2012.
“There is something profoundly wrong in America when one out of five profitable corporations pay nothing in federal income taxes,” US Democratic presidential candidate Bernie Sanders said of the GAO report. “Large corporations cannot continue to get more tax breaks when children in America go hungry. We need real tax reform to ensure that the most profitable corporations in America pay their fair share in taxes.”