Trump’s plan to encourage US companies to repatriate profits held offshore will allow the 50 biggest American corporations to save at least $300bn (£240bn), according to research by Oxfam. Trump has promised that he will get America’s biggest companies to bring their vast offshore cash piles back to US soil by offering a one-off tax holiday. The plan is to tax repatriated money at 10% rather than at the statutory rate of 35%.
America’s 50 biggest companies had combined offshore cash piles of more than $1.6tn in 2015, according to Oxfam’s research. Corporate America has been keeping the money overseas because through legal loopholes corporations can defer US taxes continually so long as income is not repatriated to the US. The amount of money held offshore, much of it in tax havens, increased by $200bn in 2015, according to Oxfam’s Rigged Reform paper. The charity said the companies were exploiting a network of 1,751 subsidiaries in tax havens to hold cash from the US tax authorities.
Apple holds more than $200bn off-shore, and was last year accused of tax avoidance by the European commission and ordered to pay €13bn (£11bn) in back taxes. Apple’s chief executive, Tim Cook said that he expected to bring home much of the offshore cash pile in 2017. He said Apple had set aside “several billion dollars for the US for payment as soon as we repatriate” some or all of the money. Oxfam’s research suggested that Apple would save $43.5bn in tax by taking advantage of Trump’s one-off 10% repatriation tax.
Other companies sitting on vast fortunes parked offshore include the drugs maker Pfizer, with $193bn, Microsoft, with $124bn, and GM, with $104bn.
Ana Arendar, Oxfam’s head of inequality, said: “These companies have deepened their use of tax havens and increased efforts to build influence to push for even greater tax breaks than they already have. Corporate tax dodgers cheat the US out of approximately $135bn in unpaid tax revenues every year and poor countries out of an estimated $100bn annually.”
The report claims that the 50 companies spent $2.5bn on lobbying between 2009 and 2015, including an estimated $352m specifically spent on influencing the tax debate. The total amount spent on lobbying works out at about $46m for every member of Congress.