A bill to stop corporations from sheltering income in the Cayman Islands and other tax havens was introduced in the Senate this week by Sen. Bernie Sanders. The legislation also would end tax breaks for companies that ship jobs and factories overseas. Sanders’ bill and a companion measure to be introduced in the House by Rep. Jan Schakowsky would yield more than $590 billion in revenue over the next decade. Here are a dozen examples of businesses that have used tax havens to dodge U.S. taxes:
Bank of America, Goldman Sachs, JP Morgan Chase, and Citigroup wanted all of the advantages of being American when they took bailouts in 2008. They went to the U.S. Treasury Department and the Federal Reserve to receive trillions of dollars in financial assistance. But when it comes to paying taxes, these same financial institutions want the IRS to believe that the profits they make are in the Cayman Islands, Bermuda, the Bahamas, or other tax havens where the corporate tax rate is 0.0 percent to avoid paying taxes. For example, in 2010, Bank of America set up over 200 subsidiaries in the Cayman Islands. As a result, Bank of America did not pay a nickel in federal income taxes. In fact, it got a rebate from the IRS to the tune of $1.9 billion.
Apple It wants all of the advantages of being an American company, but it doesn’t want to pay American taxes or American wages. It creates the iPad, the iPhone, the iPod, and iTunes in the United States. But, Apple manufactures most of its products in China so it doesn’t have to pay American wages. It funnels most of its profits through Ireland, Luxembourg, the British Virgin Islands, and other tax havens to avoid paying U.S. taxes. Without such tactics, Apple’s federal tax bill in the United States would have been $2.4 billion higher in 2011.
Google It has cut its worldwide tax bill by about $1 billion a year using a pair of strategies called the “Double Irish” and “Dutch Sandwich,” which move profits first through Ireland (which has a corporate tax rate of 12.5%), the Netherlands and finally to Bermuda which has a 0.0 percent corporate tax rate.
Cisco Systems It has cut its income taxes by $7 billion since 2005 by booking roughly half its worldwide profits at a subsidiary in Switzerland that only employs about 100 people.
Facebook, Microsoft and Forest Laboratories have used tax-cutting strategies that move profits into subsidiaries – often with no employees or anything other than a post office box – in tax havens such as Bermuda, the Cayman Islands and Switzerland.
Pharmaceutical companies like Eli Lilly and Pfizer have fought to make it illegal for the American people to buy cheaper prescription drugs from Canada and Europe. But, during tax season, Eli Lilly and Pfizer shift drug patents and profits on drugs like Lipitor to the Netherlands and other offshore tax havens to avoid paying U.S. taxes.