This report identifies the 26 U.S. corporations with the largest stockpiles of untaxed overseas profits and analyzes how much they could help meet U.S. infrastructure needs if these firms paid the taxes they owe on their offshore profits (but can legally put off paying).
They need modern ports, stronger bridges, faster trains, and the fastest Internet.
To modernize our infrastructure, the American Society of Civil Engineers estimated it would cost $3.6 trillion by 2020. They warned that if we fail to make these investments, American citizens and businesses will face costs of $1.8 trillion a year in travel delays, water leaks, and power failures.
How has Congress responded? It's slashed infrastructure spending to the lowest levels since the post-WWII era.
The cut-backs are in part the result of an abundance of tax credits and loopholes won by high-priced corporate lobbyists. One particularly costly loophole allows large corporations to shift their U.S. profits to jurisdictions where corporate taxes are low or non-existent. Offshore corporate tax abuse costs the U.S. Treasury as much as $90 billion a year.
To generate funds to pay for our nation’s crumbling infrastructure, Congress is considering giving corporations a "tax holiday." Under current law, corporations can defer U.S. tax payments on overseas earnings until they bring the profits to the United States. The proposed “tax holidays” would allow corporations to bring these profits back now, but they would be taxed at a much lower tax rate than normal.
Each of these proposals rewards the very companies that have worked the hardest to game the tax system. These policies would also shortchange our future by generating just a small fraction of the $3.6 trillion we need to invest in our aging infrastructure by 2020 and wouldn't address the longer-term problem of legalized tax dodging.
When we tried this over ten years ago, it failed miserably. Corporations that participated shaved nearly $100 billion off their long-term IRS bills. And instead of boosting investment, they used the windfalls to buy back their stock and boost dividends while laying off more workers than they hired. Once the holiday was over, they began rebuilding their overseas profit stashes.
Burning Our Bridges found that if just 26 American corporations paid the U.S. taxes they owe, we could use the revenue to repair our nation's crumbling bridges, dams, water treatment systems, and much more.
Just 26 firms account for more than half of the $2.1 trillion in untaxed profits U.S. corporations are currently holding offshore. Each of these firms has accumulated more than $20 billion in overseas earnings. Together, they operate 1,086 subsidiaries in tax haven nations.
These 26 firms’ offshore profits have exploded more than five-fold since the last tax holiday on overseas earnings. Microsoft, Google, Apple, and Qualcomm each grew their offshore stashes by more than twenty-fold between 2005 and 2014.
If these companies were to pay the taxes they owe on their overseas profits, the government could gain about $364 billion, enough to cover the cost of repairing all of the country’s wastewater and stormwater systems and repair or replace all of the country’s deficient dams and restore all the nation's local, state, and national parks.
Closing the offshore tax dodging loophole for ALL corporations could raise at least $590 billion over the next decade, and $90 billion more every year thereafter. This would represent a significant down payment on the nation’s overall infrastructure investment needs.
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