Corporate America managed to lobby for loopholes in the tax code that benefits the companies. They are also working doubly hard to keep them as is. US companies have been showering Washington with money in an effort to thwart away tax reform laws that could make them pay more taxes.
This is according to the new study by the Public Citizen, a reform advocacy group. The study also showed that corporate profits increased to all-time highs as part of the US gross domestic product and at the same time, corporate taxes were at near record lows. This was attributed to the lobby that US corporations have made for loopholes that allow them to keep most of their profits out of the reach of the Internal Revenue Service, which is estimated to be around $1.7 trillion in cash held in offshore accounts.
Apple CEO Tim Cook was asked by a Senate panel to explain why his company is keeping more than $100 billion overseas. The company spent $2 million on lobbies in 2012. It is expected to double this year. Apple managed to avoid paying taxes legally on $74 billion profits since 2009. This was according to an investigation made by the Senate.
The US government is looking for ways to decrease the budget deficit. Some lawmakers are now trying to close some of the loopholes in the tax code. There are now two bills in Congress with the goal of doing so. These are the Stop Tax Haven Abuse Act and the Cut Unjustified Tax Loopholes Act.
A third bill would implement taxes on transactions. The Wall Street Trading and Speculators Tax Act will not close loopholes but address the fact that the financial sector in the US makes up 30 percent of total corporate profits but only pay 18 percent of total corporate tax revenues to the government.