Oxfam outlined a range of tricks, tools, and loopholes companies use to avoid paying tax, including “earnings stripping”, inversions and avoiding repatriating their foreign profits back to the US. The organization underlined that most of the local companies involved in IFC’s development initiatives in Sub-Sahara Africa use offshore companies for avoiding paying taxes to the African countries which are struggling to increase their tax revenue base.
In a wide-ranging report, Oxfam said some of the best known American corporations, including drug maker Pfizer, investment banker Goldman Sachs, retailer Walmart, technology giant Apple, the General Electric consumer products company, software manufacturer Microsoft and others, keep cash reserves overseas.
The latest findings also show that America’s most prominent companies, which together made almost $4trn in profits globally between 2008 and 2014, received a staggering $11 trn in U.S. government support over the same period.
While hoarding their funds in havens, the big 50 companies spent about $2.6 billion on lobbying between 2008 and 2014, Oxfam said.
In the U.S., there have been murmurs that tax reforms making such profit-shifting illegal might be proposed, while in the United Kingdom, the government announced this week it had signed no transparency arrangements with hundreds of tax havens under its auspices.
Tax avoidance has become standard business practice across the globe. According to Oxfam’s report, only five of the top 50 companies paid the 35 percent tax rate.
“Corporate tax dodging costs the USA 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.
“For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts”, said Oxfam.
That’s below the statutory corporate tax rate of 35 percent and lower than what the average American worker pays, which is 31.5 percent.
“Yet again we have evidence of a massive systematic abuse of the global tax system”, Robbie Silverman, senior tax advisor at Oxfam said.
The name of the report is ‘Broken at the Top – How America’s dysfunctional tax system costs billions in corporate tax dodging‘.
America’s biggest companies are not good at paying taxes.
Companies avoid taxes by, for example, licensing intellectual property and the like to offshore subsidiaries in low-tax jurisdictions. “It’s like constantly playing a game of catch-up”, says Boise, whose research focuses on USA corporate and global tax policy.
Of course, payroll and Social Security-related taxes have climbed considerably since the 1950s, which means it’s not terribly surprising that the government now collects a smaller share of its overall revenues from corporations.
