Table of Contents
Corporate tax evasion with U.S. companies results in missing, legally mandated funds in the billions or even trillions, especially when accounted for year upon year. That’s money that could have gone to improving the quality and access to social services, chipping away at the $27 trillion of U.S. national debt, and funding a long list of efforts to better the country.
The Zero Theft Movement seeks to eradicate the rigged layer of the economy, a part of our financial system where crony capitalists and corrupt officials unethically profit by price fixing, bid rigging, and other means. Corporate tax evasion might be a major area of the rigged layer, allowing the rich, powerful, and immoral to accumulate money that should be going to the government.
In this first part of our series on corporate tax evasion, we will provide insight into the basics of tax laws and the amount major corporations are depositing offshore (according to credible sources).
Cause for Concern?
For FY 2017, U.S. citizens paid around 88.9% or $4,443 billion of the nation’s total taxes. All corporations and businesses paid about 7.2% or $349 billion.
Note : Using the figures from USA Facts, we calculated the tax for individuals by adding up income, sales, property and payroll taxes. Corporate tax is straight from the same source.
That 80-plus percent disparity between the taxes paid by individuals vs. corporations alone probably raised many of your eyebrows. In 1920, corporations paid much more of the taxes—over 70% in fact.
While tax laws have changed over the years, corporate tax evasion likely contributes to the wide margin between the amount of taxes paid by the two parties. What is even more discouraging, perhaps, is that the 7.2% deserves further investigation, as ethical and small businesses probably account for a large share of the corporate tax being paid.
KEY QUESTIONS
- Are major corporations evading their taxes?
- If so, which companies are involved and how much money are they stashing elsewhere?
Corporate Tax Rate
As stated earlier, corporate tax rates have drastically lowered over the years. The most recent change to tax laws as of the writing of this article (October 2020) occurred in 2017, with the Tax Cuts and Jobs Act.
The Tax Policy Center states, “The United States imposes a tax on the profits of US resident corporations at a rate of 21 percent (reduced from 35 percent by the 2017 Tax Cuts and Jobs Act). The corporate income tax raised $230.2 billion in fiscal 2019, accounting for 6.6 percent of total federal revenue, down from 9 percent in 2017.”
Their estimate for FY 2017 proves more generous than ours (9% vs. 7.2%). Nevertheless, the legislation has caused a drop in corporate income tax raised. A few percentage points is nothing to be scoffed at, though. We’re talking about tens of billions difference per percentage point.
Fortune 1000 Revenue & Profits
| Year | Fortune 1000 Revenue | Fortune 1000 Profits |
|---|---|---|
| 2013 | $13,547,658,000,000 | $914,763,000,000 |
| 2014 | $13,757,312,000,000 | $1,187,859,000,000 |
| 2015 | $13,601,380,000,000 | $1,059,577,000,000 |
| 2016 | $13,535,525,000,000 | $891,027,000,000 |
| 2017 | $13,566,742,000,000 | $971,811,400,000 |
| 2018 | $14,378,188,000,000 | $1,112,175,600,000 |
| 2019 | $15,364,059,000,000 | $1,257,789,200,000 |
| 2020 | $15,902,339,000,000 | $1,342,013,400,000 |
Unite with your fellow citizens and fight crony capitalists and corrupt officials! Our crowdsourced, crowd-approved Total Theft Report shows you just how much is being stolen from the American public.
Tax Evasion Penalties
Let’s say a citizen lives and works in the U.S. but decides to deposit their paychecks into their off-shore bank. When April comes around, they opt not to report that income when filing their taxes in order to keep as much money as possible.
That’s, in a word, illegal. Below is the exact language of the law provided by the Internal Revenue Service (IRS).
“Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.”
The same sort of sanctions should apply for U.S. companies and the executives who run them, no? They clearly should not have the ability to store money offshore in order to avoid paying taxes, especially when the country has mounting national debt in the trillions.
Corporate Tax Evasion Through the Years
Between 2011-2017, estimates for the amount of corporate profits held offshore have more than doubled, from ~$1.2 trillion to ~$2.6 trillion. Listed below are quotes proposing an estimate for the years in question.
Keep in mind: the estimates come from different sources. That means what went into each of their calculation methods and the companies studied will differ.
2011-12
“The 70 U.S.-based companies studied hold $1.2 trillion in profits around the world. GE and Pfizer have built up the most money outside the U.S., with $102 billion and $63 billion respectively, according to securities filings. Apple Inc., Google Inc. and Microsoft Corp. were among the companies that increased their accumulated overseas profits by more than 40 percent in 2011.”
From Bloomberg
2013
“Research firm Audit Analytics said in a report issued last week that the total of such earnings was up 93 percent from 2008 to 2013, citing federal financial filings for companies listed in the Russell 1000 index of U.S. corporations. Foreign profits held overseas by U.S. corporations to avoid taxes at home nearly doubled from 2008 to 2013 to top $2.1 trillion, said a private research firm [Audit Analytics]’s report…”’
From Reuters
2016-2017
“Fortune 500 companies are holding more than $2.6 trillion in accumulated profits offshore for tax purposes. Just four of these companies, Apple, Pfizer, Microsoft and General Electric, account for a quarter of the total. Just 30 Fortune 500 companies account for 68 percent or $1.76 trillion of these offshore profits.”
From the U.S. Public Interest Research Group (PIRG)
Potential Untaxed and Offshore Profits
The above cited U.S. PIRG published a comprehensive report investigating the extent of corporate tax evasion by major U.S. corporations. U.S. PIRG focuses on one particular method some massive corporations use to avoid paying the government: the creation of overseas subsidiaries in locations with low corporate tax rates (‘tax havens’).
Tax Havens
U.S. PIRG claims, “Most of America’s largest corporations maintain subsidiaries in offshore tax havens. At least 366 companies, or 73 percent of the Fortune 500, operate one or more subsidiaries in tax haven countries. All told these 366 companies maintain at least 9,755 tax haven subsidiaries. The 30 companies with the most money officially booked offshore for tax purposes collectively operate 2,213 tax haven subsidiaries.”
Profits Stashed Away
“Only 58 Fortune 500 companies disclose what they would expect to pay in U.S. taxes if these profits were not officially booked offshore. In total, these 58 companies owe $240 billion in additional federal taxes. Based on these 58 corporations’ public disclosures, the average tax rate that they have collectively paid to foreign countries on these profits is a mere 6.1 percent, indicating that a large portion of this offshore money has been booked in tax havens.”
“If we assume that the average tax rate of 6.1 percent applies to all 293 Fortune 500 companies with offshore earnings, they would owe a 28.9 percent rate upon repatriation of these earnings, meaning they would collectively owe $752 billion in additional federal taxes if the money were repatriated at once.”
Part II awaits…
We have established that many massive corporations are likely storing their profits in offshore tax havens in order to avoid paying U.S. taxes. $2.6 trillion, even! There’s a significant portion of that money that’s being kept away from our economy, from the American public. Not only is tax evasion such as this illegal per the IRS, but it’s also ripping us off.
In part II, we will take a look at alleged cases of corporate tax evasion involving many of the biggest corporations operating today.
Eradicate the Rigged Layer with the Zero Theft Movement
So much of the taxes the American public pays could be offset by major corporations simply following the rules. That could be the extra funds a single mother needs to comfortably take care of her kid(s), money parents can save to help pay for college, and the list continues on.
The Zero Theft Movement seeks to end the U.S. corporatocracy and eliminate moneyed interests from politics. Our mission is, and will continue to be, to wake up 330 million American citizens to the truth. We all stand to profit from an ethical, powerful, and safe economy if we band together against the crony capitalists and corrupt officials.
See how much is being stolen, according to the public
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The ZeroTheft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. ZeroTheft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.