Use of tax havens by U.S. global companies on the rise: report

WASHINGTON (Reuters) - U.S.-based global companies are increasingly shifting profits into tax havens like Bermuda and Switzerland, a government report said, a finding likely to fuel debate over the taxes corporations pay and their flexibility in locating profits.

The Congressional Research Service analyzed profit data from multinational companies and compared reported profits and other business activity in lower-tax jurisdictions versus higher-tax countries like the United Kingdom and Canada.

Among the findings: American multinational companies reported 43 percent of their overseas profits in the tax havens studied - Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland - in 2008, the most recent year data was available.

At the same time, these same companies hired only 4 percent of their foreign workforce and made just 7 percent of their foreign investments in these same countries.

"By all indicators examined in this report, profit shifting has generally trended upward over time," the report, dated January 18 said.

The analysis found this trend increasing since 1999.

CRS, a nonpartisan research arm of Congress used by lawmakers, analyzed data compiled by the Bureau of Economic Analysis, a unit of the Commerce Department that collects economic data from non-financial companies with foreign affiliates.

U.S.-based corporations have griped for years about paying what is now the steepest corporate tax rate among all industrialized countries. At the same time, U.S. companies do tend to enjoy more generous tax breaks, including deductions and various loopholes.

To address this, President Barack Obama and Republicans alike advocate trimming the top 35 percent corporate tax rate, while scrubbing the code of favored tax breaks.

Most Republicans back moving to a 25 percent tax rate, while Obama has called for a 28 percent top corporate rate.

TAX HAVEN OR REASONABLE RESPONSE?

The consumer group Citizens for Tax Justice said the report proves that companies are manipulating their financial reporting to avoid U.S. tax.

The report acknowledged that the high U.S. tax rate gives an incentive for companies to move profits abroad.

"If companies did not respond to tax rates that would be surprising," said Will McBride, an economist with the Tax Foundation, which backs lower business tax rates.

But McBride took issue with the report's assumption that cutting the corporate rate would hurt tax revenue, arguing that the right tax rate would generate additional revenue, offsetting that effect.

(Reporting By Kim Dixon; Editing by Tim Dobbyn)

Source: http://news.yahoo.com/tax-havens-u-global-companies-rise-report-163720079--business.html

sprint britney spears At&t Wireless 9/11 Jerry Lawler godaddy andy murray