Citigroup reported that it would owe $11.5 billion if it repatriated its $42.6 billion, suggesting a foreign tax rate as low as 8 percent.
“More companies know how to do it,” said Kleinbard, a former chief of staff of the congressional Joint Committee on Taxation who said international tax-avoidance techniques are spreading. “They’ve learned the technologies from the innovative leaders, the tax technology leaders.”
U.S. lawmakers are examining changes to international taxation as part of a tax-code rewrite that would have to address the built-up earnings in a transition to a new system.
Senators Ron Wyden, an Oregon Democrat, and Rob Portman, an Ohio Republican, said last month that they saw room for an international system that would lower the U.S. tax rate, let companies bring home new profits mostly tax-free and limit companies’ ability to move profits out of the U.S.
Enzi, Camp
That would mirror the proposals offered by Senator Mike Enzi, a Wyoming Republican, and Representative Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee.
Camp’s proposal would impose a 5.25 percent tax on the accumulated earnings, whether repatriated or not, payable over eight years.
That plan, released in 2011, will eventually be part of a tax code overhaul that Camp plans to push through his committee this year. Meanwhile, the offshore stockpiles keep expanding.
“It is definitely symptomatic,” Morse said, “of companies’ incentive to keep offshore profits offshore.”