Hundreds of U.S. corporations’ profits that are held in overseas bank accounts nearly doubled between 2008 and 2013, when the total came to $2.1 trillion, reported Audit Analytics’ blog on April 1.
Conglomerate General Electric had the biggest pile of money abroad, at $110 billion. Next is Microsoft at $76.4 billion, followed by drug makers Pfizer at $79 billion and Merck & Co at $57.1 billion. High-tech Apple’s offshore stockpile is $54.4 billion. Google’s stash has climbed to $38.9 billion from $17.5 billion in 2010.
One major reason that these corporate giants store so much cash abroad is to evade U.S. taxes. A Congressional Research Service report states that the annual revenue loss in corporate taxes ranges from $30 billion to $90 billion a year (bloomberg.com, March 12).
Microsoft disclosed that if it brought their amassed profits “home” to the U.S., the company would owe $24.4 billion for taxes at the current 31.9 percent tax rate. Instead, they pay as little as 3.1 percent in foreign taxes.
Many of these companies store their profits in Bermuda, Ireland, Luxembourg, the Netherlands and/or Switzerland, where corporate tax rates are extremely low.
Hundreds of school buildings and community centers could be built or renovated with this money, employing thousands of workers. Health care clinics, parks, playgrounds, mass transit — all of these are sacrificed to let these corporations gorge themselves on cash.
Of course, workers not just in the U.S. but in countries around the globe could and should benefit from this hoard of cash, since it is their labor that created it. With billions of people living in poverty, such wealth could benefit so many. But that is not how these transnational corporations see it.
There is a deeper reason that these corporations are holding on to their cash — their capital — beyond evading taxes. If their executives expected that investing this money in new ventures, plants and offices would generate profits, these cash hoards would disappear in a torrent of new projects.
But capitalism and imperialism remain mired in a deep crisis. It is not that people no longer need new laptops, cell phones, software and medicines. It’s that big business has lowered the cost of labor involved in producing these commodities, due to modern technology and communications, and the super-exploitation of vast armies of labor in the global workforce.
With the economic crisis of overproduction combined with workers’ low wages, corporations can’t find sufficient numbers of people who can afford to buy enough goods at high enough prices to generate acceptable profit returns. So each of these giant corporations is sitting on its cash rather than spending it on new projects.
Meanwhile, millions of workers are unemployed, and millions more are locked into such low-wage jobs that they both work and go hungry at the same time.
How do the capitalist governments respond to this corporate withholding of tax revenue? Have they launched vigorous struggles to obtain a portion of these cash hordes to refill the peoples’ treasuries that were drained by the banks and investment firms during the Great Recession?
Of course not! The workers who generated all of this wealth in the first place are now a burden to them, disdained as “takers.” So all over the world these governments hatch new plans for layoffs, cutbacks in salaries and benefits, and other austerity measures, to squeeze every penny out of the workers and oppressed.
Only the determined and organized struggle by the workers and oppressed can turn this situation around. Only by replacing the current system, devoted solely to amassing vast wealth for a very few, with a socialist system designed to meet the needs of humanity, will these issues be resolved once and for all.