How Much Are Fortune 500 Companies Saving in Taxes?

shutterstock_174522404

 

It’s a well-known fact that many of the richest companies in America have become so financially successful thanks in large part to the tax-savings methods they employ, not the least of which is keeping large amounts of income overseas. These American companies have no problem doing business stateside, but because the U.S. has some of the highest corporate tax rates in the world, they can save millions in taxes by leaving that money in the country where it was earned.

In fact, according to a recent report from Citizens for Tax Justice, the largest Fortune 500 companies in America are storing as much as $2.5 trillion in foreign countries, which is $400 million more than last year. This is not hidden money, stored away in secret bank accounts, mind you, but rather revenue legally earned and held overseas. So why not bring the money back to the U.S.? As long as it stays overseas where it was earned the IRS can’t tax those earnings.

Of course, some people feel that isn’t fair, including the organization Citizens for Tax Justice, which wants the government to tax all income earned by U.S. companies, no matter what country it’s earned in. The problem with that scenario is that companies might decide to simply move their headquarters to other countries in order to avoid this extra tax, which could cost the country even more tax revenue, as well as jobs.

President Obama has recently proposed a 19 percent global minimum tax, which means any foreign subsidiary of a U.S. company that pays at least 19 percent in overseas taxes would be allowed to bring that money back to America without being taxed again stateside.

Of course, both current presidential candidates have their opinion on the matter. Donald Trump wants to significantly lower the corporate tax rate and combine it with a one-time 10 percent tax on any income being held in foreign countries. This could help give companies more of an incentive to bring the money home to the U.S. Hillary Clinton reportedly wants to keep the current standards but she also wants to add an “exit tax” for companies that leave.

Either way, it’s likely that companies will continue to keep foreign earnings overseas unless the government creates a more tax-friendly environment for American corporations.

You also might like the article Study Shows Benefit of Lower Corporate Tax

http://fortune.com/2016/10/06/fortune-500-tax-haven/

Posted in

U.S. Treasury Making Push to Keep More Corporate Taxes Home

  For any company considering a tax inversion, the latest news form the U.S. Treasury will likely make it reconsider. Tax inversions, which are used by American companies to reduce their tax bill, occur when a company acquires or opens a subsidiary in a foreign country in order to change its tax address and save…

Why Are the Wealthy Paying Fewer Estate Taxes?

Why Are the Wealthy Paying Fewer Estate Taxes?

  Why Are the Wealthy Paying Fewer Estate Taxes? The estate tax was a hot topic throughout the election process and now that we have a new president-elect it’s sure to get an even closer look when White House leadership changes hands early next year. Or course, both candidates had different views regarding this tax,…

Making the Most of Home Equity: Tips for Senior Citizens

Want to Avoid Taxes in Retirement – Try This

  There’s been no shortage of thoughts and opinions regarding Donald Trump’s tax returns since the election process began, especially since his leaked return hit the mainstream media a few weeks ago. One could argue at length regarding those numbers and whether or not they paint a positive picture of Trump and his finances. However,…

How Would Proposed Tax Plans Affect the Country’s Economy?

  We’re just days away from the election and it’s likely that most Americans will just be happy that it’s finally over, no matter whom or what they voted for. However, there are some very important things at stake in this election, including how each candidate’s tax proposals would affect our nation’s economy, as well…