Daily Management Review

Oxfam: US companies hoarding more than $ 1.5 trillion in offshores


04/12/2017


Large US companies moved out $ 1.6 trillion to countries with preferential taxation regime, bypassing the US tax authorities.



RMajouji
RMajouji
The international association of organizations to combat poverty Oxfam and the Institute of Taxation and Economic Policy prepared a study based on an analysis of tax returns and other open sources. According to the paper, in 2015 this amount increased by $ 200 billion compared to the previous year. The 50 largest US concerns funneled the money through a network of more than 1 thousand 750 subsidiaries and affiliates.

At the same time, corporations spent about $ 2.5 billion on lobbying in 2009-2015, thus having achieved significant tax benefits.

Oxfam emphasizes that under such a tax evasion strategy allows the firms to operate within the law, since the tax system offers a loophole to evade payment of honest contributions. Instead of the US tax rate of 35%, the companies paid an average of only 25.9%, or even less, due to various loopholes in the laws.

If, however, President Donald Trump implements his plan for preferential repatriation of offshore profits, US concerns will be able to save $ 312 billion to $ 327 billion. In this case, the tax rate for such repatriation will be only 10% instead of 35%.

Meanwhile, the international rating agency Fitch confirmed on Tuesday the long-term issuer default rating (IDR) in the foreign and national currencies of the USA at the maximum level of "AAA" with a stable outlook.

The short-term IDR in foreign and national currencies is affirmed at "F1 +" and the country ceiling rating is kept at "AAA".

"The US’ rating at the level of "AAA "is backed by the unsurpassed financial flexibility of the state as the issuer of the world's leading reserve currency (the share of the dollar accounts for almost two thirds of the world's reserves)," the agency said.

At the same time, Fitch believes, "tax cuts are unlikely to lead to a long-term and substantial acceleration of economic growth." "Weakness in the labor market intensifies, and productivity and demographic trends restrain potential growth rates to less than 2%. Increased protectionism in trade and the restriction of immigration will be a negative factor for growth in the medium term", the agency notes. 

Fitch also expects the US Central Bank (Fed) to continue cautiously increasing interest rates during the forecast period: two increases of 0.25% in 2017 and four in 2018. The Fed itself is still planning two more rate hikes this year. The last time the open market committee of the Federal Reserve raised its base interest rate in March to 0.75-1% per annum from the previous level of 0.5-0.75%.

The federal budget deficit in fiscal year 2016 for the first time in six years increased and reached 3.2% of GDP. Over a 10-year period, Fitch expects that the debt burden of the general government sector will increase significantly. The forecast for real GDP growth in the US this year is still 2.3%, and in 2018 - 2.6%.

source: oxfam.org, reuters.com






Science & Technology

Top ten hi-tech events of the year

Tesla Considering Designing And Developing AI Chips On Its Own To Support Its Auto-Pilot Project

Verizon to introduce 5G in five American cities in 2018

Airbus, Rolls-Royce, Siemens to create an electric aircraft

Study Finds Treatment Efficacy Could Be Sacrificed For Reduced Side Effects In Cancer Therapies By Patients

Some Information About Their Self-Driving Car Research Has Been Disclosed By Apple Scientists For The First Time

A Massive Data Breach Was Covered Up By Uber By Paying Up Hackers

A City Is Can Be Converted To A Living Organism, Showcases China’s Huawei

Workers Would Be Helped To Lift More By These Robotic Vests

British Parliament to assess impact of e-cigarettes

World Politics

World & Politics

15 countries with the highest level of organized crime

Athens agreed with international lenders

EU Pressure Reportedly Forces UK To Bow Down, Could Agree To Pay £50bn For Brexit Divorce

$1 Billion Is The Price For Freedom For Arrested Saudi Prince In Corruption Crackdown: Reports

U.S. Capital Washington Appears To Be In Range Of The Latest Missile Launched By North Korea

Ten biggest fears of millennials

Ireland Cancels The Need Of A Veto For Brexit Summit With Its Solidarity

Separatists of Catalonia are divided over the political course