Offshore Tax Evasion: US Companies and Foreign Accounts

On 11/12/14, CNBC (Jeff Cox) article “US Companies Now Stashing $2 Trillion Overseas” confirmed:

1) US Companies have $1.9 Trillion in Cash in the US and $2.1 Trillion Offshore (a 6 fold increase since 2002)

2) In 2004, when a “tax holiday” for repatriation of offshore funds was given to US Companies, the biggest companies received the benefits, cut a net 20,000 jobs, and cost the US treasury $3.3B.

3) A 2009 Study by the National Bureau of Economic Research confirmed every $1 repatriated during the tax holidays was spent: $.80 for share buy-backs, $.15 for dividends paid (i.e. total $.95 of every $1).

4) Tech and Pharmaceutical Companies hold the greatest share of overseas cash (30% of total).

5) Corporate inversions – where a US Company acquires a Foreign Company changes their tax domicile from US to foreign countries, and then reinvests their foreign earnings outside the US, shielding the foreign earnings from US income taxes is encouraged by US tax laws creating a clear incentive for US companies to keep their foreign earnings abroad.

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