The largest U.S.-based companies, including technology giants, Microsoft Corp. (MSFT), Apple Inc. (AAPL) and International Business Machines Corp. (IBM) added an additional $206 billion in untaxed overseas profits over the past year, according to a Bloomberg News analysis.
In total, the multinational companies have parked nearly $2 trillion outside the U.S., increasing their offshore holdings by 11.8 percent from a year earlier, according to securities filings from 307 corporations in the S&P’s 500 Index. (SPX) reviewed by Bloomberg. Apple, Microsft and IBM added $37.5 billion, or 18.2 percent of the total increase.
It should be noted that a great deal of these so-called “offshore profits” raked in by multinationals on quarterly basis, are in reality U.S. profits that have been camouflaged through accounting gimmicks as “foreign” profits generated by a subsidiary in an offshore tax haven.
“The loopholes in our tax code right now give such a big reward to companies that use gimmicks to make it look like they earn their profits offshore,” Dan Smith, a tax and budget advocate at the U.S. Public Interest Research Group, which seeks to counteract corporate influence, told Bloomberg.
The practice of stockpiling untaxed overseas profits are part of a contentious debate in the U.S. Congress over a fiscal policy and tax code that generally allows companies to not pay taxes on profits earned by offshore subsidiaries if the money isn’t brought back to the U.S. Lawmakers from both political parties point to the deferral of hundreds of billions of dollars in U.S. taxes — the top 15 companies now hold nearly $800 billion outside the U.S. — as a symptom of a failed corporate tax system.