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 "The new numbers ... certainly highlight what is one of the key
challenges for tax reform. I do think there need to be some reforms
in this area," Senate Finance Committee Chairman Ron Wyden told
reporters on Tuesday on Capitol Hill.
Under U.S. law, corporations do not have to pay income tax on most
of their overseas profits until they are brought into the United
States. These earnings can be held offshore for years if they are
classified as indefinitely invested abroad.
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.
Conglomerate General Electric Co had the biggest pile of earnings
stored abroad, at $110 billion, the firm said.
Next were software maker Microsoft Corp, with $76.4 billion;
drugmakers Pfizer Inc, with $69 billion, and Merck & Co Inc, with
$57.1 billion; and high-tech group Apple Inc, with $54.4 billion, it
said.
In response, GE said in a statement: "GE operates in more than 170
countries, and most of these overseas earnings have been reinvested
in active business operations like manufacturing facilities and
loans to non-U.S. customers."
A Merck spokesman said the company files its tax returns in
accordance with all applicable laws and regulations.
A Microsoft spokesman referred questions to 2012 congressional
testimony, in which company officials said it abides by foreign and
U.S. tax laws.
In testimony in 2013 before Congress, Apple Chief Executive Tim Cook
said the company is a large taxpayer and does not use tax gimmicks.
Apple declined to comment on the new report.
Pfizer was not immediately available for comment.
BAUCUS AND WYDEN
Congress has quarreled for years over the law that lets
multinationals stash profits abroad tax-free. Some favor killing the
law, known as offshore corporate income tax deferral, and some back
a one-time tax holiday that would let companies bring foreign
profits home, or "repatriate" them, at a low tax rate.
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Debate over offshore deferral flared again in November when Wyden's
predecessor as finance committee chairman, former Democratic Senator
Max Baucus, proposed doing both. Baucus resigned weeks later to
become U.S. ambassador to China.
Wyden in the past has called for repeal of offshore deferral, along
with a repatriation holiday, among other changes to the tax code,
which he last month called "a rotten carcass that the special
interests feast on."
No decisive action is likely for now, however, with Congress
deadlocked over fiscal issues at least until after the November
mid-term congressional elections, according to policy analysts.
Next year lawmakers are likely to mount another push to overhaul the
tax code, a politically difficult feat that has not been
accomplished since 1986, when Republican President Ronald Reagan and
a divided Congress managed to get it done.
The top U.S. corporate income tax rate is 35 percent, though few
multinationals pay anywhere near that thanks to tax-reducing
loopholes written into the code in the past 28 years, including some
that have enabled wider use of offshore deferral.
(Additional reporting by Lewis Krauskopf and Bill Berkrot in New
York, Bill Rigby in Seattle, Edwin Chan in San Francisco; editing by
Howard Goller and Tom Brown)
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