HARTFORD, Conn. (WTNH) — A new report released Tuesday by a Connecticut based consumer group reveals that up to 73% of all Fortune 500 companies are maintaining subsidiaries in offshore tax havens, including some large Connecticut companies.
The report, released Tuesday by the Connecticut Public Interest Research Group, concluded that many large corporations are avoiding billions of dollars in United States taxes by placing profits in offshore tax havens in places such as Bermuda, or the Cayman Islands. While many Connecticut companies hold money in offshore tax havens, three large companies were specifically highlighted in the report; Xerox, Cigna, and United Technologies.
According to the report, Xerox maintains 49 subsidiaries in offshore tax havens. The company reports holding $9 billion offshore for tax purposes, but it does not disclose what its estimated tax bill would be if it didn’t book those profits offshore.
Cigna has placed $2.2 billion offshore in 15 tax haven subsidiaries in places like Bermuda, Hong Kong and the Netherlands, while United Technologies maintains 31 tax haven subsidiaries with $29 billion offshore, including in the Cayman Islands, according to the report.
Kate Cohen, State Director for the Connecticut Public Interest Research Group, highlighted that other nations are cracking down on tax dodging, and she believes the United States also take a closer look at the issue.
Corporate tax dodging may be legal, but it’s certainly not good for everyday taxpayers and responsible small businesses. It disadvantages small businesses that don’t have scores of tax lawyers, creates an economic environment that favors accounting tricks over innovation and real productivity, and forces the rest of us to foot the bill. We’re beginning to see a growing international interest in cracking down on corporate tax dodging, and with $717.8 billion on the line, it’s time for the U.S. to start doing the same.”
Matthew Gardner, a spokesperson for the Institute on Taxation and Economic Policy, explained that the only way for the U.S. to get this tax money back would be to adjust the current tax codes.
“Every year, corporations collectively report that they have tens of billion more in cash stashed offshore than they did the year before. The hard fact is that the U.S. tax code incentivizes tax haven abuse by allowing companies to indefinitely defer taxes on offshore profits until they are ‘repatriated.’ The only way to end this kind of tax avoidance is by closing the loopholes in the tax code that enable it.”