Dodging Repatriation Tax Lets US Co.’s Bring Home Billions in Foreign Earnings

U.S. companies routinely bring home hundreds of billions of dollars in foreign earnings and pay trivial amounts of U.S. taxes on those repatriations. Overall, repatriation strategies help U.S. multinationals avoid about $25 billion a year in federal income taxes. Companies devote enormous resources first to moving income to tax havens and then to bringing those profits back to the U.S. at the lowest possible tax cost.

Examples include:

  • Merck & Co. Inc (MRK) brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering-Plough Corp. (SGP).
  • Pfizer Inc. (PFE) imported more than $30 billion from offshore in connection with its acquisition of Wyeth and took steps to minimize the tax hit on its publicly reported profits.
  • Eli Lilly & Co. (LLY) carried out many of the steps for a tax-free importation of foreign cash after its roughly $6.5 billion purchase of ImClone Systems Inc. in 2008.

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