As large American companies continue to lobby Congress for tax reform that would lower their tax rates, a study of historical corporate tax rates found that they are in fact paying at rates roughly half of those they paid decades ago.

The Washington Post analyzed 30 large companies listed on the Dow Jones Industrial Average — companies like McDonalds, Microsoft, and Exxon Mobil — and found that their tax rates have fallen even as profits have risen, thanks in large part to tax laws that provide incentives to store overseas profits in offshore tax havens. Many of the companies, the Post found, are paying rates less than half what they paid in the 1960s and 1970s, and most of the 30 have vastly reduced their rates in that time:

A Washington Post analysis of data from S&P Capital IQ, a research firm, found that in the late 1960s and early 1970s, companies listed on the current Dow 30 routinely cited U.S. federal tax expenses that were 25 to 50 percent of their worldwide profits. Now, most are reporting less than half that share. [...]

Out of all the firms in the Dow 30, 22 have seen a drop of more than 10 percentage points between the oldest year for which data are available and the most recent year.

American tax law allows companies to shield foreign profits from taxation until they are brought back to the United States, and corporations have happily obliged. The largest 83 corporations moved $166 billion overseas in 2012 alone, bringing their total to $1.46 trillion, and most of it, according to a Congressional Research Service study, was kept in tax havens like Bermuda, the Cayman Islands, Luxembourg, and Ireland. As a result, they have seen huge reductions in tax rates: McDonald’s, for example, saw its tax rate plunge from 37 percent in 1973 to 14 percent in 2012.

Corporate profits hit a 60-year high in 2011, right as the effective corporate tax rate hit a 40-year low. America’s largest companies, in fact, haven’t paid the full corporate tax rate in 45 years, and 26 have avoided taxation altogether for the past four years. At the same time, business leaders have lobbied Congress to reform the corporate tax code by adopting a territorial tax system that would exempt most foreign profits from American taxation, making it even easier for the companies to shift profits, investments, and jobs overseas.

One analysis found that a territorial system would lead to the creation of 800,000 jobs in other countries that otherwise could have been created in the United States. An alternative tax reform that closes corporate loopholes that lead to the offshoring of profits and jobs wouldn’t bring the tax rate back to historical levels, but it would still generate roughly $168 billion in revenue over the next decade.

Tax havens are in many ways the liger of the financial world: everyone knows they exist, but few among us have ever seen one. They exist in a realm most of us remain blissfully unaware of, accessed only by the wealthiest in society.

However, fresh off their 15 minutes of fame during Mitt Romney’s presidential campaign, tax havens are now being promoted more openly as investment companies try to stoke rich people’s fears and encourage them to avoid paying U.S. taxes.

Exhibit A is an investment company named Buy Belize, whose website appeals to wealthy individuals who “lose sleep over the security of [their] assets & hard-earned money” using right-wing language terminology such as “death taxes,” which they incorrectly list at 55 percent (it’s actually 40 percent). The group encourages people to take their money out of the United States and store it in Belize instead, which they call “one of world’s top tax havens — a truly safe locale for your money.” Buy Belize also offers to set up shell companies — International Business Companies — to “protect investments from taxes as well as legal judgments.”

Buy Belize also advertises on The Glenn Beck Program, appealing to wealthy people who are “frustrated, nervous, and worried about change” to open offshore accounts in Belize, “one of the last tax havens left in the world.”

Listen to the radio ad:

Offshore accounts are a principal mechanism rich people and corporations use to avoid paying taxes in the United States. A study last year found that the super-wealthy around the world are shielding at least $21 trillion in secret offshore tax havens, and the problem has grown significantly in the past few years. And it isn’t just Mitt Romney who stores his wealth in foreign tax havens. In 2012, the 60 largest corporations in America offshored $166 billion, costing American taxpayers billions in lost revenue. As a result, this loss of tax revenue is draining federal and state budgets.

To learn more about offshore accounts, listen to NPR’s Planet Money as they demonstrate opening up a shell company “UnBelizeAble.”

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.

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.

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.

American corporations avoid millions of dollars in taxes each year by reporting that large shares of their income are earned in five popular tax havens, even though small segments of their workforce and investment take place in those countries, according to data from the Congressional Research Service.

The report analyzed five countries — Switzerland, Ireland, the Netherlands, Bermuda, and Luxembourg — that serve as popular tax havens, compared with five countries — Canada, Germany, the United Kingdom, Australia and Mexico — where American companies typically do large shares of their business. What it found, as Citizens for Tax Justice highlighted, is that even though large shares of their workforces and investment concentrated in the “traditional economies,” large shares of their profits were reported in the five tax havens:

In 2008, American multinational companies reported earning 43 percent of their $940 billion in overseas profits in the five little tax-haven countries, even though only four percent of their foreign workforce and seven percent of their foreign investments were in these countries.

In contrast, the five “traditional economies,” where American companies had 40 percent of their foreign workers and 34 percent of their foreign investments, accounted for only 14 percent of American multinationals’ reported overseas’ profits.

American companies have become experts at routing profits overseas, with companies like Apple and Microsoft avoiding billions of dollars in taxes each year. The problem has gotten particularly bad in the last decade, as this chart from the report shows:

At the same time, many business leaders are advocating for a particular corporate tax reform, known as the territorial tax system, that would make it even easier to route profits overseas and avoid American taxes.

Tech companies are some of the most notorious tax dodgers, as their business is easily shifted from place to place and their revenues easily hidden in tax havens. Case in point, Yahoo has funneled hundreds of millions of dollars into low-tax countries, saving it tens of millions of dollars in taxes, as Bloomberg News reported:

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.”

Recently ousted French President Nicolas Sarkozy is planning to move to London in order to found a multi-billion dollar hedge fund, a move that would conveniently avoid France’s new tax hike on the super-wealthy and stymie a police investigation into Sarkozy’s allegedly corrupt campaign tactics. Sarkozy’s intentions were discovered in a police raid on his home:

If the move goes ahead, the former French president could escape a planned top tax rate of 75 per cent in his home country.

He and wife Carla Bruni would be likely to settle in an affluent area such as South Kensington, and would become the most high-profile Gallic celebrity couple in the capital.

Though France is currently restructuring its plan to tax citizens with incomes over one million euros ($1.33 million) at a 75 percent marginal rate, Sarkozy is not the first rich man to run away: actor Gérard Depardieu fled to Russia on explicitly tax-related grounds, favorably comparing Russian authoritarianism to French democracy in the process.

Upon taking office in 2007, Sarkozy more than doubled his personal salary.

Evidence that the global corporate tax rate has dropped significantly in the past decade counters a conservative myth that corporations suffer from too-high taxes. As several countries — most prominently the UK — renew scrutiny over tax dodging, a Deutsche Bank report illustrates how the global effective corporate tax rate has dropped significantly in the past decade:

Corporations avoid paying taxes on billions in earnings by registering profits to low-tax havens. Recently, Amazon, and Starbucks, among others, have faced fire in the UK for “immoral” tax dodging. Starbucks pays an overseas tax rate of 13 percent, “one of the lowest in the consumers goods sector,” while Apple and Amazon have paid single-digit global tax rates and just 3.2 percent and 5.3 percent on overseas profit.

In the U.S., corporate profits are at an all-time high, while revenue from the corporate income tax has plummeted. (HT: Business Insider)

Last week, Reuters noted that the online retail giant Amazon had avoided hundreds of millions of dollars in taxes by stashing cash in Luxembourg, a notorious tax haven. Today, Bloomberg News’ Jesse Drucker reported that Amazon is not the only tech company employing this strategy — Google last year avoided $2 billion in taxes worldwide thanks to shifting money to Bermuda:

Google Inc. (GOOG) avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.

By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.

The increase in Google’s revenues routed to Bermuda, disclosed in a Nov. 21 filing by a subsidiary in the Netherlands, could fuel the outrage spreading across Europe and in the U.S. over corporate tax dodging. Governments in France, the U.K., Italy and Australia are probing Google’s tax avoidance as they seek to boost revenue during economic doldrums.

The UK, in particular, has been cracking down hard on tax avoidance by multinational companies, including Google. “People want to know why companies which benefit from an infrastructure paid for by them and are paying people low wages who receive taxpayer-funded tax credits from the exchequer are not paying their fair share,” said Margaret Hodge, chair of the UK public accounts committee. .

In addition to corporate tax dodging, tax havens facilitate tax avoidance by the super-rich. According to the Tax Justice Network, the world’s wealthiest are shielding about $21 trillion in offshore tax havens. If that $21 trillion “was taxed at just 30 percent, this would generate tax revenues of nearly $200 billion — roughly twice the amount OECD countries spend on international development assistance.”