Florida PIRG Education Fund, Florida Consumer Action Network, and Citizens for Tax Justice
St Petersburg, October 6 – Tax loopholes encouraged more than 72 percent of Fortune 500 companies – including several Florida-based companies like Office Depot – to maintain subsidiaries in offshore tax havens as of 2014, according to “Offshore Shell Games,” released today by Florida PIRG Education Fund and the Florida Consumer Action Network. Collectively, the companies reported booking nearly $2 trillion offshore for tax purposes, with just 30 companies accounting for 65 percent of the total, or $1.35 trillion.
“When corporations dodge their taxes, the public ends up paying,” said Michelle Allen of the Florida PIRG Education Fund. “The American multinationals that take advantage of tax havens use Florida roads, benefit from our education system and large consumer market, and enjoy the security we have here, but are ultimately taking a free ride at the expense of other taxpayers.”
“If we close tax loopholes for corporations that hide profits offshore, we can raise billions of dollars to invest in America,” said Susan McGrath, Executive Director of Florida Consumer Action Network. “ We can make classrooms less crowded, improve roads and bridges, find new medical cures, and make America energy independent.”
“All too often, corporations’ offshore cash isn’t offshore at all—it’s right here in the United States,” said Robert McIntyre, director of Citizens for Tax Justice. “Corporations are using skilled tax attorneys to make it appear on paper that their U.S. profits, and their U.S.-based cash, are being earned, and kept, in foreign tax havens. The tax code makes this scam possible. Incredibly, Congress is considering pouring salt on the wound by giving companies a special low tax rate to ‘repatriate’ profits that, in many cases, are likely already here.”
Every year, offshore tax loopholes used by U.S. corporations cost Florida $1.2 billion in state tax revenue. That money would be more than enough to restore funding to the Everglades Project to restore the wetlands and protect the water supply to one-third of the state.
The nationwide study, prepared by U.S. PIRG Education Fund and Citizens for Tax Justice, shows that while most very large companies use tax havens, a smaller subset are most aggressive about using offshore tax havens to avoid taxes.
Key findings of the report include:
– At least 358 Fortune 500 companies operate subsidiaries in tax haven jurisdictions, as of 2014. All told, these companies maintain at least 7,622 tax haven subsidiaries. The 30 companies with the most money booked offshore for tax purposes collectively operate 1,225 tax haven subsidiaries.
– Approximately 60 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 $1.35 trillion overseas. That is 65 percent of the nearly $2 trillion that Fortune 500 companies together report holding offshore.
– Only 56 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 56 companies would collectively owe $170 billion in additional federal taxes, more than twice Florida’s state budget. The average tax rate the 56 companies currently pay to other countries on this income is a mere 6.3 percent, implying that most of it is booked to tax havens.
Companies headquartered in Florida that were highlighted by the study include:
– Office Depot: Office Depot has booked $416 million offshore, booking profits to 26 subsidiaries in offshore tax havens in places such as Bermuda, the Cayman Islands, and Ireland.
– World Fuel Services: The fossil fuel distribution company officially reports $1.3 billion offshore in 37 different subsidies.
– Ryder System: The Miami-based truck rental company officially holds $658 million offshore for tax purposes in 14 different subsidiaries including Bermuda, Hong Kong, and the Netherlands.
“Because Bay Tech Label pays its fair share of taxes, my business is at a disadvantage against the huge corporations that can get away with paying very little or no taxes at all,” said Karl Nurse, president of Bay Tech Label. “Businesses should compete on level ground, based on their innovation and what they can offer to customers, not based on their access to savvy tax attorneys.”
“As a citizen and as a clergyperson, I believe wholeheartedly that this shirking of fair responsibility is perverse and severely damaging to humankind and to earthkind and I would say, thereby, that it is immoral and can and should be ended by federal law,” said Reverend Jack Donovan, pastor of the Unitarian Universalist Church of St Petersburg.