Yahoo has taken advantage of the law to quietly funnel hundreds of millions of dollars in global profits to island subsidiaries, cutting its worldwide tax bill. [...]
Yahoo’s offshore operations cut its taxes by $42.8 million in 2011, U.S. securities filings show. Last February, the company reported a dispute with the U.S. Internal Revenue Service regarding its overseas arrangements. It didn’t disclose the amount at stake.
Kimberly Clausing, an economics professor at Reed College, estimates that “Profit shifting into tax havens by corporations costs the U.S. $90 billion a year.” That cost then gets shifted onto other businesses and individuals in the form of higher taxes or decreased government services.
Across the globe, corporate tax rates have plummeted in recent years, which one major bank admits “lend[s] and argument to those calling for hikes“:
The Wall Street Journal reported today that much of the money that U.S. corporations claim is offshore, and thus exempt from taxation, is actually right here in America. As the Wall Street Journal put it, this fact “undermines a central argument made by companies seeking tax relief to bring home money they have earned abroad.”