Attorney Joe Garza Decries Tax System: U.S. Corporations Hiding $1.4 Trillion Overseas
Charity organization Oxfam recently released a study in which it claims that U.S. Corporations are hiding $1.4 trillion in overseas tax havens, and Attorney Joe Garza would like to draw attention to the broken U.S. tax system before corporations are unduly vilified. “If the U.S. tax system made more sense, companies probably wouldn’t hold as much income offshore,” said Garza. “The fact that it costs so much to repatriate that income to the United States is very unattractive to most companies.”
Repatriation, or bringing money stashed overseas back to the U.S., would be taxed at the American corporate tax rate, the highest in the world. While many politicians propose a repatriation “tax holiday,” a large-scale overhaul of the tax laws may be the only answer.
The Oxfam statistic comes amid rulings from the European Union demanding more transparency from large companies regarding where they make profits and where they pay taxes on those profits. The Guardian reports that Oxfam studied the 50 largest U.S. corporations to arrive at the $1.4 trillion mark.
While the fact that large companies have income stored overseas may not come as a surprise, a larger issue remains: that money was likely not earned in any of the “tax haven” countries where it is being held. Many American companies earn money overseas and detour that income through shell companies in tax-free countries (like Panama), thereby rendering the income as non-taxable. Corporations are coming under increased scrutiny for their tax avoidance schemes, and U.S. Giants like Apple and Amazon have had to pay millions—many argue the the numbers should be in the billions—in back taxes. Last January, Amazon paid $260 million in a settlement on tax avoidance charges, and they probably got off easy.
Apple, General Electric, and Microsoft were the top three corporations on Oxfam’s tax avoidance list—all three companies had holdings over $100 billion in offshore havens. Will that money be brought back to the U.S.?
“Until the tax laws change, I don’t see that money coming back,” said Garza. “It simply costs too much to have all that income in the United States. They keep more of it when it stays overseas.”