America's top companies have stashed a staggering $2.10 trillion of profits overseas in countries with lower or no tax rates, according to a new report.
Nearly three-quarters of companies found on the Fortune 500 list hold profits in tax havens like Bermuda, Ireland, Luxembourg and the Netherlands that, if repatriated and taxed in America, would yield about $620 billion in taxes, according to the study by Citizens for Tax Justice and the US Public Interest Research Group Education Fund.
The largest holder of offshore profits was Apple, with $181.1 billion, followed by General Electric with $119 billion, and Microsoft with $108.3 billion stashed overseas. Just 30 companies account about 65 percent of the offshore holdings, the report said.
The numbers highlight a frequent debate over "shell games," in the United States, in which US-based companies avoid paying the US tax rate of 35 percent on profits they make by keeping the money in low tax countries where they pay as low as 6 percent.
The authors of the study, Robert S. McIntyre, and Richard Phillips of Citizens for Tax Justice, and Phineas Baxandall, of the US PIRG Education Fund, urged Congress to take action to fix the shell game problem and stop forcing US taxpayers to make up the difference in tax revenue. They suggested forcing companies to repatriate the profits and pay their 35 percent tax share, as well as closing all loopholes in current tax law for corporations.
"Rather than paying their fair share, many multinational corporations use accounting tricks to pretend for tax purposes that a substantial portion of their profits are generated in offshore tax havens, countries with minimal or no taxes where a company's presence may be as little as a mailbox," the authors wrote in the report's summary.
The groups used the companies' own financial filings with the Securities and Exchange Commission to reach their conclusions.
To highlight their point, the authors included a photo of a five story building in the Cayman Islands that is the registered address of more than 18,000 American companies.
"Congress can and should take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets," the study concluded.
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