U.S. firms indefinitely defer corporate taxes on foreign income not repatriated

Evidence

In general, under U.S. tax law, a U.S. firm with overseas operations can indefinitely postpone paying U.S. corporate tax on its foreign income by conducting its foreign operations through a foreign-chartered subsidiary. As long as the company’s foreign earnings remain under the control of the subsidiary and are reinvested abroad, U.S. corporate income taxes are “deferred.” The firm pays U.S. taxes on the overseas earnings of the subsidiary only when the parent company “repatriates” the earnings from the foreign subsidiary as intrafirm dividends or other income. According to a 2012 J. P. Morgan study, U.S. multinational firms have over $1.7 trillion in foreign earnings “parked” overseas in this manner and thus shielded from U.S taxes. — David Vine, Base Nation_ How U.S. Military Bases…, 729

Categorization

Category: Factual Claims

• XREF: Connects to broader offshore tax-haven literature and the J.P. Morgan trillion-dollar parked-earnings figure regularly cited in tax reform debates.