The scandal of Panama papers leak has shed lights on huge account of money laundering from offshore tax havens. It has slowly swept important officials from all around the world. The magnitude of money that is involved in the offshore tax havens is incredible, and if the report from Oxfam is to be believed, U.S. corporations alone have hidden $1.4 trillion cash in offshore tax paradise.
American corporate giants Apple, Walmart, and General Electric have stashed $1.4 trillion (£980 billion) in tax havens despite receiving trillions of dollars in taxpayer support, the anti-poverty charity organization Oxfam claimed.
The bold claim of Oxfam is based on the charity’s analysis of the financial affairs of the 50 biggest U.S. corporations.
“The sum, larger than the economic output of Russia, South Korea and Spain, is held in an ‘opaque and secretive network’ of 1,608 subsidiaries based offshore, said Oxfam.”
The new report by Oxfam, titled Broken at the Top was released ahead of Tax Day in the U.S. and shortly after of the Panama Papers leak. This shows the extent to which major corporations such as Pfizer, Walmart, Goldman Sachs, Alphabet, Disney, and Coca-Cola keep money in offshore funds.
“The use of over 1,600 subsidiaries lowered their global tax rate on $4 trillion of profit to an average of 26.5%, compared to the statutory minimum of 35%, according to Oxfam.”
Additionally, for every dollar of taxes these companies paid, they collectively received $27 in federal loans, loan guarantees, and bailouts footed by American taxpayers, Time reported.
“‘The vast sums large companies stash in tax havens should be fighting poverty and rebuilding America’s infrastructure, not hidden offshore in Panama, Bahamas, or the Cayman Islands,’ Oxfam America president Raymond Offenheiser said in a statement.”
Apple is currently on the top of Oxfam’s list. Oxfam believes Apple is holding $181 billion offshore in three subsidiaries.
Boston-based electric giant General Electric lies safely on second. Oxfam believes that General Electric has received around $119 billion stored in 118 tax haven subsidiaries. Oxfam believes general electric received $28 billion in taxpayer backing.
Apple’s technology rival Microsoft also did not seem shy in the report. Microsoft sat third on the list with $108 billion. The top 10 list featured pharmaceuticals giant Pfizer, Google’s parent company Alphabet, and Exxon Mobil, the largest oil company not owned by an oil-producing state.
“Oxfam calculated that $1.4 trillion is being kept in offshore tax havens with the $1 trillion paid in tax by the top 50 US firms between 2008 and 2014.”
Oxfam claimed out that the companies had also enjoyed a combined $11.2 trillion in federal loans, bailouts, and loan guarantees during the same period, the Guardian reported.
“According to the Guardian, Overall, the use of tax havens allowed the US firms to reduce their effective tax rate on $4tn of profits from the US headline rate of 35% to an average of 26.5% between 2008 and 2014.”
Robbie Silverman, a senior tax adviser at Oxfam said, “Yet again we have evidence of a massive systematic abuse of the global tax system.
“We can’t go on with a situation where the rich and powerful are not paying their fair share of tax, leaving the rest of us to foot the bill. Governments across the globe must come together now to end the era of tax havens,” he added.
Tax avoidance by U.S. corporations costs the country some $111 billion a year. The tax dodge is also aiding the global wealth divide by draining $100 billion from the poorest countries, Oxfam estimated.
“Tax dodging practised by corporations and enabled by federal policymakers contributes to dangerous inequality that is undermining our social fabric and hindering economic growth,” the report said.
U.S. firms made $80 billion in profit in Bermuda, a safe offshore tax haven like Panama. That is more than their combined reported profits in Japan, China, Germany, and France, four of the world’s five largest economies, said Oxfam.
[Photo by Arnulfo Franco/AP Images]