Two of Connecticut’s biggest companies have $130 billion in the name of foreign subsidiaries, allowing them to defer tax payments, according to a report released today by U.S. PIRG, a consumer advocacy group.
General Electric, which has the most money of any company parked offshore at $108 billion, and United Technologies Corp. were among the 100 largest public companies included in the study, which collectively are holding $1.2 trillion offshore, according to the nonprofit’s analysis.
[Update] A GE spokesman said in an emailed statement Wednesday evening:
“More than half of GE’s business is outside the U.S. We are funding that business with profits generated overseas. GE pays billions of dollars in corporate income taxes to governments around the world.”
The Hartford Business Journal has reached out to UTC for comment on the report.
Of the 100 companies studied, 82 percent of them maintain subsidiaries in offshore tax havens, where tax rates are lower than in the United States, the report says.
Pfizer, the world’s largest drug maker, which has a research center in Groton, operates 174 subsidiaries in tax havens — the third highest of the 100 companies — and books $73 billion in profits offshore, the report says. U.S. PIRG charges that the companies use accounting gimmicks to shift the location of taxable profits, even when the money is often invested in U.S. banks or assets.
Companies must pay taxes once the money is “repatriated” to the United States in the form of share purchases or dividends, the report says. But U.S. PIRG argues that companies are getting away with assigning domestic profits to foreign subsidiaries, allowing them to benefit from the stability of the U.S. financial system.
Of the 100 companies, only 21 disclose the amount they would expect to pay in U.S. taxes if they didn’t keep profits offshore. Those 21 would collectively owe more than $93 billion in additional federal taxes, the report says.
