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News : US Economy Last Updated: Mar 13, 2014 - 7:24 AM


Corporate Tax Avoidance: US groups from Apple to IBM increase cash 'abroad' by $206bn
By Michael Hennigan, Finfacts founder and editor
Mar 12, 2014 - 1:53 PM

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Corporate Tax Avoidance: The biggest US business groups from Apple to IBM added $206bn to their hoards of offshore profits last year, parking earnings in low-tax countries with the hope that Congress will declare a tax holiday with the help of paid campaign gifts to elected members.

In 2011, the Business Roundtable, a lobby group for the big companies, commissioned PricewaterhouseCoopers, the Big 4 accounting firm, to produce a misleading/ dodgy report on corporate tax to support a tax holiday or a big cut in the rate as happened in 2003, to encourage repatriation of overseas profits.

Bloomberg News reports that multinational companies have accumulated $1.95tn outside the US, up 11.8% from a year earlier, according to securities filings from 307 corporations it reviewed. Three US-based companies -- Microsoft Corp., Apple Inc. and International Business Machines Corp. -- added $37.5 bn, or 18.2% of the total increase.

Some of the cash is technically abroad: The US Senate Permanent Subcommittee on Investigations last May revealed that Apple kept most of its hoard in the US and as with other companies an overseas cash abroad is generally held in US dollar accounts of US banks. Companies can also invest so-called trapped cash in US Treasuries.

Gridlock in Washington DC and the legalization of most forms of political bribery - - there are rules to maintain a fiction between an official office and politics, which the last Virginia governor has been accused of crossing - -  has given great leeway to buy big business to buy political influence.

'The Treason of the Senate,' a compilation of articles by journalist David Graham Phillips on how US Senate seats were bought, was published by newspaper owner William Randolph Hearst in 1906 (Hearst's father George had purchased one of the California Senate seats in the 1880s) , and together with Ida Tarbell's celebrated 19-issue magazine series on John D. Rockefeller's Standard Oil Trust, gave rise to the word 'muckraker' and led to the break-up of the oil giant by the US Supreme Court in 1911, into 34 independent companies and the direct election of the US Senate from 1914 rather than mainly chosen by corrupt state legislatures.

A century later in 2010, the US Supreme Court overturned the Tillman Act of 1907, which banned companies from making direct contributions to federal political candidates.

Bloomberg says in today's report that the top 15 companies now hold $795.2bn outside the US, up 10.6%.

US multinational companies reported earning 43% of their 2008 overseas profits in Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland, more than five times the share of workers and investment they have in those jurisdictions, according to a 2013 Congressional Research Service .

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