Many of us refer to today as tax day. Others might be more likely to refer to April 15th as tax avoidance day. As reported by the Washington Post, U.S. companies stashed another $200 billion in profits overseas last year, escaping billions of dollars in taxes in the process.
The level of unrepatriated foreign profits has reached 2.4 trillion dollars according to the Citizens for Tax Justice, permitting companies to avoid nearly 700 billion dollars in tax payments. Among Fortune 500 companies, Apple, Microsoft and Pfizer increased their stockpile of overseas profits the most.
While some complain about such corporate behavior, there is a very good explanation for it. U.S. companies face the highest tax rate in the developed world at thirty five percent. Bring overseas profits back home would result in enormous tax payments, reducing the amount of capital available for investment.
For years, many have hoped for Congress to reduce the tax rate and simplify the tax code. In his latest budget proposal, President Obama has called for imposing a nineteen percent tax on foreign profits, far less than the current rate. But there seems to be little political urgency to address the issue during an ongoing presidential election cycle. For WYPR, I’m Anirban Basu.
