Even as American corporations are raking in record profits, the largest among them are shifting larger amounts of money away from the United States and into offshore tax havens that allow them to pad their bottom lines even more, according to multiple analyses of legal filings made since the beginning of 2013.

The Wall Street Journal found that the 60 largest companies moved $166 billion offshore in 2012, shielding 40 percent of their earnings from American taxes and costing the U.S. billions in lost revenue:

The amount of money at stake is significant, particularly when the U.S. budget deficit is high on the political agenda. Just 19 of the 60 companies in the Journal’s survey disclose the tax hit they could face if they brought the money back to their U.S. parent. Those companies say they might have to pay $98 billion in additional tax—more than the $85 billion in automatic-spending cuts triggered this month after the White House and Congress couldn’t agree on an alternative.

A similar analysis from Bloomberg found that 83 of the largest American companies moved $183 billion overseas in 2012, bringing the total offshore to $1.46 trillion for those 83 companies alone. Most of the companies, like Apple, Microsoft, and Yahoo, have set up subsidiaries in low-tax countries like Bermuda, Ireland, and the Cayman Islands specifically to receive tax benefits. That has ramifications for states, which lost $42 billion in revenue to corporate tax dodging in the last three years alone, and taxpayers and small businesses, who often have to pick up the tab.

And while the debate over corporate tax reform has flared again in Washington, the favorite reform of Republicans and corporate lobbying groups would only exacerbate the problem, making it easier for corporations to push even more money overseas at the expense of revenue and investment that could be made in the United States.

Republicans in Congress have been pushing for the implementation of what’s known as a territorial tax system. Under such a system, the overseas profits of U.S.-based companies would be forever exempt from taxation. And the GOP is going to get a little help soon from a new lobbying entity, according to Politico:

The group — dubbed the LIFT America coalition — is in the process of seeking corporate members and hasn’t yet officially launched .

Partners, a Washington public affairs firm, is handling the group’s communications, recruitment and strategy.

Recruitment documents obtained by POLITICO indicate the group’s primary focus is pressing Congress to shift the corporate tax regime to a so-called territorial system in which companies are shielded from paying tax on most — if not all — of the profits they earn in other countries.

Currently, the U.S. corporate tax system exempts overseas profits until they are brought back to the U.S., giving companies little reason to ever bring them back. However, shifting to a territorial system would make that problem even worse. According to the Congressional Budget Office, a territorial system could “result in a less efficient allocation of resources among countries by increasing incentives to shift business operations and reported income to countries with lower tax rates.”

Switching to a territorial system would cost the U.S. about 800,000 jobs and more than $130 billion in revenue. As economist Jane Gravelle explained, a territorial system “would cause investment to flow abroad, and that would reduce the capital with which workers in the United States have, so it should reduce wages.” Already, corporate profits are at an all-time high, while worker wages are at an all-time low.

Last September, the non-partisan Congressional Research Service released a report showing that tax cuts for the rich — contrary to GOP orthodoxy — have minimal effect on economic growth or job creation. Instead, they simply increase income inequality. Republicans pressured the CRS to pull the report down; it was eventually re-posted with the same conclusions.

Last month, another non-partisan agency, the Congressional Budget Office, released an analysis showing that one of the GOP’s favorite corporate tax ideas would end up pushing jobs overseas. Again, instead of reexamining their ideas, Republicans are attacking the messenger:

The Congressional Budget Office is defending a recent report on how U.S. multinational corporations are taxed, after a top Republican criticized the analysis as biased. [...] “This report purports to provide an even-handed review of different policy issues related to the taxation of foreign source income,” [House Ways and Means Committee Chairman Dave] Camp (R-MI) wrote to [CBO Director Doug] Elmendorf last month.

“However, a closer analysis of the report reveals that it is heavily slanted and biased in favor of one specific approach to the taxation of foreign source income – and relies heavily on sources that tend to support that conclusion while ignoring sources that support a different conclusion,” he added.

Elmendorf defended the report, saying it “presents the key issues fairly and objectively and that its findings are well grounded in economic theory and are consistent with empirical studies in this area.”

The GOP’s idea — known as a “territorial” tax system — would permanently exempt U.S. corporations from paying taxes on profits they make overseas. CBO found such a system would result in “increasing incentives to shift business operations and reported income to countries with lower tax rates.”

Carnival’s “cruise from hell” — during which the ship lost power off the Yucatan peninsula and was stuck for days, leaving passengers no recourse to relieving themselves in plastic bags — finally ended last night as the crippled boat was tugged into port. “It was horrible. Horrible,” one passenger said. “The bathroom facilities were horrible and we could not flush toilets. No electricity and our rooms were in total darkness.”

Carnival will be refunding money to the passengers of the ill-fated cruise and offering them a free trip in the future. (“This is my first and last cruise. So if anyone wants my free cruise, look me up,” one passenger said.) But one entity to which Carnival has not been giving any money is the national treasury — as the New York Times’ David Leonhardt reported, the company has paid just a 1.1 percent rate on 11.3 billion in profits over the last five years:

The Carnival Corporation wouldn’t have much of a business without help from various branches of the government. The United States Coast Guard keeps the seas safe for Carnival’s cruise ships. Customs officers make it possible for Carnival cruises to travel to other countries. State and local governments have built roads and bridges leading up to the ports where Carnival’s ships dock.

But Carnival’s biggest government benefit of all may be the price it pays for many of those services. Over the last five years, the company has paid total corporate taxes — federal, state, local and foreign — equal to only 1.1 percent of its cumulative $11.3 billion in profits. Thanks to an obscure loophole in the tax code, Carnival can legally avoid most taxes.

Carnival uses a tax loophole that allows companies incorporated overseas to avoid U.S. taxes, even if the bulk of their operations are based in the states. Between 2008 and 2011, 26 major corporations in the U.S. managed to pay no income tax, despite making $205 billion in pre-tax profits. (HT: Teamster Nation)

Between 2008 and 2011, 26 major corporations were able to pay no federal corporate income tax, despite making a combined $205 billion in profits. According to a new report from Citizens for Tax Justice, Facebook joined that illustrious club last year, receiving $429 million in tax rebates despite making more than $1 billion in profits:

Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.

Instead, Facebook says it will receive net tax refunds totaling $429 million.

Facebook’s income tax refunds stem from the company’s use of a single tax break, the tax deductibility of executive stock options. That tax break reduced Facebook’s federal and state income taxes by $1,033 million in 2012, including refunds of earlier years’ taxes of $451 million

Facebook will be able to carry further tax rebates forward, according to CTJ, for a total of $3 billion in tax deductions.

“When profitable corporations can use the stock option tax deduction to pay zero corporate income taxes for years on end, average taxpayers are forced to pick up the tax burden,” said Sen. Carl Levin (D-MI) when this issue arose as Facebook was preparing its initial public offering last year. This tax preference for corporations costs the U.S. about $2 billion in revenue per year.

In the last few years, tech companies have gotten very good at using offshore tax havens to drive down their effective tax rates. And they evidently have some company. The Wall Street Journal noted today that drug companies are also increasingly using offshore tax gimmicks to drive down their tax rates, boosting profits without investing in new medicines:

Bristol-Myers Squibb Co., BMY +0.46% in its recent earnings call, estimated its tax rate would be about 16% this year, excluding special items, down from 23% last year. Then Gilead Sciences Inc. GILD -0.23% said its rate could “decline over time” if a hepatitis C drug it is developing receives approval, because of steps the company has taken to lower taxes on the drug’s sales. Also, Amgen Inc. AMGN +0.16% reported it paid an effective tax rate of 15.9% last year, and predicts an adjusted rate of 14% or 15% this year.

Many drug makers pay effective tax rates of 20% or higher. Firms that are seeking even lower rates don’t specify their strategies, and the details can vary. But the efforts typically involve shifting revenue overseas where it can be taxed at a lower rate than in the U.S., experts say. Some companies also noted the tax benefit they will receive this year from a federal tax credit for research and development.

Reductions in their tax rates could mean hundreds of millions of dollars in extra profit for drug makers, without having to sell more drugs or launch new ones.

Brand name drug prices are also skyrocketing, giving companies more incentive to simply make tons of cash off already created products and then stash it offshore.

Sen. Bernie Sanders (I-VT) is introducing a bill today that would boost revenue by $590 billion via the elimination of huge corporate tax giveaways. Offshore tax dodging alone costs the federal government $150 billion annually.

Corporations offshoring profits costs both the federal government and states billions of dollars per year. One of the more egregious giveaways is known as “deferral,” which allows U.S. corporations to avoid paying taxes on overseas profits until they bring that money back to the U.S., giving them every incentive to leave it overseas permanently.

According to the Congressional Budget Office, “The current tax system provides incentives for U.S. firms to locate their production facilities in countries with low taxes as a way to reduce their tax liability at home,” ultimately resulting in compensation for U.S. workers being lower. Sen. Bernie Sanders (I-VT) is introducing a bill today that would end this practice and close several other corporate tax loopholes:

Under this legislation, corporations would pay U.S. taxes on their offshore profits as they are earned. This legislation takes away the tax incentives for corporations to move jobs offshore or to shift profits offshore because the U.S. would tax their profits no matter where they are generated.

Under the Corporate Tax Fairness Act, U.S. corporations would continue to get a credit against their U.S. taxes for foreign taxes they pay. That means that when an American corporation has profits in a country with lower corporate taxes than the U.S., they would pay the federal government the difference between the foreign rate and the U.S. rate. When an American corporation has profits in a country with higher corporate taxes than the U.S., they would pay nothing to the U.S.

According to the Joint Committee on Taxation, “the provisions in this bill will raise more than $590 billion in revenue over the next decade.”

Due to the proliferation of loopholes, credits, and the use of tax havens, major corporations haven’t paid the full statutory tax rate in 45 years. In 2011, the 12.1 percent effective rate that corporations paid was the lowest in 40 years.

In 2011, U.S. corporations paid a 12.1 percent effective corporate income tax rate, a 40-year low. The statutory corporate tax rate is 35 percent, but companies drive their rates fare lower due to the proliferation of loopholes and deductions and the growing use of offshore tax havens.

This isn’t a new problem, as Goldman Sachs’ David Kostin shows. In fact, corporations have been paying below the statutory rate for 45 years (the chart uses 39 percent due to its inclusion of state corporate taxes):

For the last 45 years, the median S&P 500 firm has paid an effective tax rate averaging more than 5 percentage points below the statutory rate. Despite statutory rates hovering near 39% for the last 25 years, effective tax rates have been gradually decreasing (see Exhibit 2). At 30%, the current S&P 500 median effective tax rate is almost 10 percentage points below the statutory level, and close to the global statutory average.

The corporate income tax is so riddled with holes that 26 major corporations paid nothing between 2008 and 2011, while making a collective $205 billion in profits. Democratic Sen. Carl Levin (MI) this week released a plan to raise $200 billion over ten years by closing corporate tax loopholes. (HT: Sam Ro)

State and local governments lost $39.8 billion last year because corporations and the wealthy shifted profits to offshore tax havens, an amount roughly equal to what they spent on firefighters in 2008, according to a new report from the U.S. Public Interest Research Group (PIRG). The federal government lost $150 billion in revenue to the same practices.

Corporations shifting profits to tax havens like Bermuda and the Cayman Islands has consequences for both individual taxpayers and America’s small businesses, and it also complicates efforts to reduce the size of the national deficit, a priority of both parties in Washington. The $150 billion lost to offshore tax avoidance at the federal level annually, the report notes, would be more than enough to offset the automatic spending cuts that are set to take place at the beginning of March if Congress does not offset it. Those cuts total $1.2 trillion over the next decade.

“So much of the discussion in the recent fiscal cliff negotiations centered on shared sacrifice,” Rep. Lloyd Doggett (D-TX) said on a conference call announcing the report. “I think that it is important in considering this report and its implications to reflect on that fiscal cliff agreement, because in it, corporations did not contribute a cent to resolving the fiscal cliff.”

The $150 billion lost to tax havens could cover the cost of Pell Grants for 10 million students for the next four years. It is also enough to double federal spending on Head Start and other education programs or pay for every high-speed rail project proposed by state governments in 2009. At the state level, $40 billion lost is enough to boost the number of firefighters back to 2008 levels or to cover the cost of education for 3.7 million children.

“Every dollar hidden abroad means less money for infrastructure, less money for education, less money for the investments that we need to create a strong local business climate for independent small businesses back home,” the Main Street Alliance’s Sam Blair said.

Meanwhile, offshore tax havens make America’s small businesses less competitive with large corporations. A previous PIRG report found that it would cost each small business $2,116 to make up revenue lost to corporate use of offshore tax havens.

Eight states — California, New York, New Jersey, Illinois, Minnesota, Massachusetts, and North Carolina — lost at least $1 billion to offshore tax havens last year. California, a state that has enacted massive budget cuts in recent years, lost $7.1 billion in 2011, while New York and New Jersey each lost more than $4 billion.

A Democratic Senator wants to raise $200 billion over ten years by closing corporate tax loopholes, according to Bloomberg News. Sen. Carl Levin (D-MI) wants to ditch a slew of goodies for corporations, as well as a loophole that allows wealthy money managers to pay far less in taxes than middle-class families:

Senator Carl Levin’s push to close tax loopholes will target corporate deductions for stock options and rates on investment income known as carried interest, seeking to raise at least $200 billion by one estimate.

In a memo to Democratic Senate committee leaders on Friday, the Michigan Democrat described proposals to end what he called excessive corporate tax deductions, scrap the blended tax rate for derivatives such as commodity futures and strengthen enforcement of the tax code, Bloomberg BNA reported. [...]

The plan is estimated to raise at least $200 billion over 10 years, according to a person with knowledge of the details. Levin told reporters he was sharing ideas with fellow senators and had asked the congressional Joint Tax Committee to estimate budget costs and savings for the provisions.

Republicans (and plenty of Democrats) like to talk about revenue-neutral corporate tax reform, in which every dollar raised if offset by a reduction in the corporate tax rate. Levin has consistently opposed this approach, and for good reason.

Corporate profits are currently at record highs while corporate taxes have plummeted. Corporations paid just a 12.1 percent effective tax rate in 2011. The corporate income tax used to make up about one-third of federal revenue, but today it makes up less than 9 percent. The corporate income tax used to follow along with corporate profits, but the two have become decoupled, with negative impacts for the federal budget:

As former White House economist Jared Bernstein noted, “locking in these historically low revenue levels, either as a share of GDP, total receipts, or profits, would be yet another self-inflected wound.”