NPR‘s daily show, Fresh Air, Jesse Drucker from Bloomber News engaged in an interesting discussion yesterday about the multinational companies that save billions in taxes by using other countries with lower corporate income tax. What does this mean for the country’s economy, both that of the US and the offshore tax havens? From WHYY on NPR:
The top corporate income tax level in the United States is 35 percent. In the United Kingdom, it’s 28 percent. But in Ireland, it’s only 12.5 percent, and in Bermuda there’s no corporate income tax at all. That means multinational companies that shift their earnings through Ireland or Bermuda can save billions of dollars in taxes each year.
On today’s Fresh Air, Bloomberg News reporter Jesse Drucker, who has written extensively about corporate tax-dodging, explains how companies like Google, Pfizer, Lilly, Oracle, Facebook and Microsoft have managed to reduce their tax rates by hundreds of millions — and in some cases, billions — of dollars by taking advantage of offshore tax havens.
In October, Drucker reported that Google had saved $3.1 billion in taxes in the past three years by shifting the majority of its foreign profits into accounts in Ireland, the Netherlands and Bermuda using financial techniques called “the Dutch Sandwich” and “the Double Irish” arrangement. Basically, he says, Google credited its Irish office with the majority of its non-U.S. sales revenue — and then shuttled that money through various subsidiaries located in Ireland and other countries to save billions in taxes.
[Continues at NPR]