America’s 50 largest companies are holding about $1.4 trillion in cash offshore, allowing them to avoid US corporate taxes, according to Oxfam America.
US companies are required to pay federal taxes on their global profits, but only when that money is brought back to the US.
Apple, Microsoft, Google, and even non-tech companies, understand that rule and therefore leave much of their huge profits in overseas accounts.
For the most part US companies have openly defended their moves, saying that repatriating the money held overseas would be detrimental to their cash on hand numbers.
The US government levies a 35% tax rate on repatriated cash, much higher than they currently pay.
Oxfan says Apple’s effective corporate tax rate was 25.9% from 2008 through 2014.
The Oxfam report shows that Apple is holding $181 billion offshore.
Apple CEO Tim Cook said in December that he would “love to” repatriate Apple’s foreign profitsbut that he can’t because “it would cost me 40%.”
The 40% refers to the combined U.S. federal and state tax rate Apple would likely owe.
General Electric is the second biggest company in terms of cash held offshore. The company is responsible for keeping $119 billion away from the United States
The top five are rounded out by Microsoft, Pfizer, and IBM.
Oxfam based its $1.4 trillion calculation on 2014 financial reports from 50 of the biggest companies in the U.S.
Admittedly some of that money is invested in overseas operations for many of these companies, but a large percentage is simply kept overseas to avoid higher US corporate taxes.