Tumblr Icon RSS Icon

Microsoft Uses Tax Havens To Drive Its Tax Rate Down To Seven Percent

By Pat Garofalo  

"Microsoft Uses Tax Havens To Drive Its Tax Rate Down To Seven Percent"

Share:

google plus icon

Even as the Senate approved a deal to raise the debt ceiling that cuts trillions from the federal budget without increasing revenue by one dime, the fact remains that federal revenue is currently at a 60-year low. (The House approved the debt ceiling deal last night.) And part of the reason that overall revenue so low is that corporate tax revenue has plunged over the last few decades.

Even though the U.S. has one of the world’s highest corporate tax rates on paper, it actually collects the second-lowest corporate tax revenue in the developed world, thanks to myriad loopholes and deductions in the corporate tax code and rampant tax evasion. Case in point, Reuters notes that Microsoft’s tax rate last year was just seven percent, due to the company’s extensive employment of tax havens:

Microsoft is straightforward about the core reason for its lower tax bill: It is increasingly channeling earnings from sales to customers throughout the world through the low-tax havens of Ireland, Puerto Rico and Singapore…The change is fueling its shrinking tax bills. According to its 2010 annual report, by keeping a good chunk of foreign earnings away from the U.S., Microsoft has accumulated $29.5 billion overseas — and that is before the impact of its last financial year.

Microsoft joins a slew of corporations that take advantage of tax havens to drive their tax rates down. Google, for instance, paid just a 2.4 percent tax rate last year thanks to its use of tax havens.

At the same time that its sheltering income all over the world in order to avoid taxes, Microsoft is part of a coalition lobbying for a tax holiday that would allow corporations to bring money they have parked in tax havens back to the U.S. at a dramatically low tax rate. The holiday would cost nearly $80 billion, while a similar holiday approved in 2004 did not deliver any of its promised results.

‹ BREAKING: Senate Approves Debt Ceiling Deal

America’s Mayors Call On Congress To Refocus On Job Creation ›

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.