Report: Bank of America among US companies saving on taxes by keeping profits offshore
05/19/2014 4:58 PM
05/19/2014 6:58 PM
Bank of America tops the list of Charlotte-based companies avoiding big tax bills by keeping profits offshore, according to a new report by a nonprofit tax research and advocacy group.
Citizens for Tax Justice found that 301 U.S. Fortune 500 companies disclosed holding nearly $2 trillion in profits offshore. By holding this income overseas, those companies are saving nearly $550 billion in estimated taxes, according to the report.
The group said the findings show that a wide variety of companies are using offshore tax havens, not just a select few companies such as Apple that have faced congressional scrutiny in recent years.
The study is based on the disclosures companies make in annual securities filings, but some disclose more than others.
Among Charlotte companies, Bank of America and Duke Energy were among only 58 companies that disclosed how much they would have to pay in taxes if their income was “repatriated” and brought back to the U.S.
Bank of America said it would owe $4.3 billion in taxes on $17 billion of income, while Duke said it would owe $288 million on $1.7 billion of income, according to the report. The companies with the largest estimated tax bills if they brought profits home were Apple ($36.4 billion) and Microsoft ($24.4 billion).
Bank of America spokesman Jerry Dubrowski noted that the Charlotte bank has paid more than $25 billion in federal income taxes over the last 10 years.
“There are a variety of reasons and factors involved in the decision to create a subsidiary in a specific geographic locale – including legal, regulatory and accounting requirements, as well as the need to serve the business needs of a particular client or customer,” he said.
Duke spokesman Tom Williams said 10 to 15 percent of the company’s earnings are generated overseas. The company has advocated that the federal government find a “tax-efficient” way for companies like Duke to bring profits back to the U.S., he said.
Three other Charlotte-area companies disclosed “unrepatriated income” but not their estimated tax bill. Industrial conglomerate SPX said it had $1.6 billion in profits overseas, followed by steel maker Nucor with $222 million and home improvement retailer Lowe’s with $51 million. Representatives of Lowe’s and SPX declined comment, and Nucor did not immediately respond to a request for comment.
If U.S. companies bring profits back home, this income is taxed at the U.S. corporate income tax rate of 35 percent, minus a tax credit for whatever taxes were paid to foreign governments, according to Citizens for Tax Justice.
Of the 58 companies that revealed how much in taxes they owed, 28 paid an income tax rate of 10 percent or less to the foreign governments where their profits were officially held, the report said, “indicating that most of these profits are likely in offshore tax havens.” Bank of America was among the 28 companies.
The group called on the Securities and Exchange Commission to require more information about offshore profits and urged lawmakers to resist calls for tax law changes that would reward companies for moving profits offshore.
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