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Top American companies including pharmaceutical giant Pfizer Inc. are saving at least $550 billion in taxes by holding profits in overseas tax havens, according to a report Monday by the advocacy group Citizens for Tax Justice.
The report said 28 U.S. corporations acknowledge paying less than 10 percent in taxes on foreign holdings totaling $409 billion. Pfizer, which the report said has subsidiaries in Bermuda, the Cayman Islands, Ireland, the Isle of Jersey, Luxembourg and Singapore, "does not disclose how much of its $69 billion in offshore profits are stashed in these tax havens."
"Corporations exploit all manner of loopholes to avoid paying their fair share, and then they get their lobbyists and allies on Capitol Hill to say this tax dodging is justified because the U.S. corporate income tax rate is too high," Robert McIntyre, director of the advocacy group, said in a statement.
But McIntyre said U.S. corporate tax rates are not much different from those in other developed countries, where these corporations make most of their profits.
In addition to New York-based Pfizer, the report looks into a variety of multinational corporations from all 50 states.
In Connecticut, General Electric, United Technologies, Praxair, Xerox, Priceline.com, Terex, Pitney Bowes and W.R. Berkley are among the companies placing money in foreign accounts to save on taxes.
The report said U.S.-based Fortune 500 corporations are holding profits of nearly $2 trillion in offshore accounts.
"While congressional hearings over the past few years have focused attention on the tax avoidance strategies of technology corporations like Apple and Microsoft ... a diverse array of companies (is) using offshore tax havens," the report said.
Among these are U.S. Steel, pharmaceutical marketer Eli Lilly, apparel maker Nike, financial powerhouse American Express, gaming empire Wynn Resorts and banking giant Bank of America.
"A large number of the biggest corporations appear to be increasing their offshore cash significantly," the report said.
The report said 301 of the 500 top corporations in America have disclosed holding some income as so-called "permanently reinvested" offshore profits. Most of these companies have failed to disclose what they would have paid in U.S. taxes had they not shielded their assets, the report said, despite accounting rules that call for such disclosure.
The rules contain a loophole that allow companies to declare these tax-liability calculations as being impractical, the report added.
"The real problem isn't the statutory U.S. corporate income tax rate," McIntyre said. "The problem is the laws that allow far too many large corporations to reap the benefits of the U.S. economic system and then give little or nothing in taxes to support our country in return."
Citizens for Tax Justice called for lawmakers to end a tax loophole allowing corporations to indefinitely exempt offshore profits from U.S. income taxes.
"Ending deferral would mean that all profits of U.S. corporations, whether they are generated in the U.S. or abroad, would be taxed by the United States in the year they were earned," the report said.
Foreign tax credits would still apply, meaning corporations would not face double taxation, according to the report.