U.S. corporations have reported to the Internal Revenue Service that 54 percent of their offshore profits are earned in 12 tax haven countries that, combined, only account for 4 percent of economic output among all countries where U.S. corporations do business.
A new
The 10 other countries with dubious corporate profits versus GDP ratios are the Bahamas, Barbados, the British Virgin Islands, Cyprus, Ireland, Luxembourg, Netherlands, Netherland Antilles, Singapore and Switzerland.
CTJ contends that U.S. companies are using accounting gimmicks to make it appear as though they are earning profits in tax haven countries to avoid U.S. taxes, and this is happening on a large scale.
Separately, a group of multinational corporations lobbying for lower corporate tax rates, the Alliance for Competitive Taxation, has released a
In addition, the ACT report examines how the United Kingdom dealt with this issue, and what it means for U.S. corporate tax reform efforts today. Speaking at a press briefing earlier this month, ACT economic advisor Dr. Laura D. Tyson, who formerly chaired the President's Council of Economic Advisers during the Clinton Administration, said, “There has been a recent wave of cross-border mergers where the U.S. company is larger, but the merged entity has chosen to establish tax headquarters in a foreign jurisdiction. When I look at those facts, I conclude very quickly, as do most observers of what is going on, that this is a clear indication that the U.S. corporate tax system is increasingly no longer competitive, that it increasingly makes the U.S. not an attractive location to incorporate a new business.”