The Government Accountability Office has cited a number of insurance companies, including American International Group, as having subsidiaries in areas classified as tax-havens. The list mentions property-casualty insurers, life insurers and health insurers including Berkshire Hathaway, the Hartford, MetLife, Travelers and United Health.
Obviously the $h*t is much deeper than the reported story indicates – the 63-page GAO report, International Taxation: Large U.S. Corporations and Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions only looks at publicly the 100 largest publicly traded corporations and 100 largest publicly traded contractors.
Privately held companies and contractors were beyond the scope of the GAO investigation and report; therefore, insurers and the affiliated companies of the insurance industry that are privately owned, including those insurers that operate as a mutual fund, aren’t included even when their use of tax havens and/or privacy jurisdictions is well known.
GAO prepared the report at the request of Congress and acknowledged:
Today, corporations operate in a global economy and most of the largest U.S. corporations have subsidiaries in other countries. Corporations have foreign subsidiaries for a variety of business reasons, including reasons related to taxes. For example, a corporation may establish a foreign subsidiary to take advantage of sales opportunities, natural resources, or favorable labor conditions.
Keeping all of those reasons in mind, take a look at the results of the GAO investigation:
Eighty-three of the 100 largest publicly traded U.S. corporations in terms of 2007 revenue reported having subsidiaries14 in jurisdictions listed as tax havens or financial privacy jurisdictions and 74 of the 83 had federal contracts in fiscal year 2007. For the 74 corporations, the amount of the federal contract obligations ranged from $12,000 to over $23 billion. Additional details about these corporations include the following:
• Eighty-six of the 100 corporations had foreign subsidiaries and 14 did not. Eighty-three of the 86 corporations had subsidiaries in locations other than jurisdictions listed as tax havens or financial privacy jurisdictions.
• Four of the 83 corporations that had subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions had more than 100 subsidiaries in such jurisdictions.
• For the 83 corporations with subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions, the number of such subsidiaries ranged from 1 for nine corporations to a high of 427 for one corporation.
• Twelve corporations had more than 50 percent of their foreign subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions. Three of these 12 only had one foreign subsidiary.
• Corporations had subsidiaries in 36 of the 50 jurisdictions listed as tax havens or financial privacy jurisdictions.
• Eight jurisdictions listed as tax havens or financial privacy jurisdictions had more than 100 corporate subsidiaries, ranging from 123 to 569. For the jurisdiction with 569 subsidiaries, 372 were owned by four corporations.
• Thirty-four of the 100 corporations are also on the list of 100 largest publicly traded U.S. federal contractors.
Sixty-three of the 100 largest publicly traded U.S. federal contractors in terms of fiscal year 2007 contract obligations reported having subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions, 34 did not, and 3 did not provide information about the locations of all of subsidaries.
The following additional details about the federal contractors are based on the 97 contractors that provided complete information.
• Seventy-two of the 97 federal contractors had foreign subsidiaries and 25 did not. Sixty-nine of the 72 contractors also had subsidiaries in locations other than jurisdictions listed as tax havens or financial privacy jurisdictions.
• For the 63 federal contractors with subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions, the number of such subsidiaries ranged from 1 for 11 contractors to a high of 83 for 1 contractor.
• Four federal contractors had more than 50 percent of their foreign subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions. Three of the four had all of their foreign subsidiaries in such jurisdictions.
• Federal contractors had subsidiaries in 34 of the 50 jurisdictions listed as tax havens or financial privacy jurisdictions.
• Five of the jurisdictions listed as tax havens or financial privacy jurisdictions had more than 100 federal contractor subsidiaries, ranging from 111 to 156.
• Thirty-four of the 100 federal contractors are also on the list of 100 largest publicly traded U.S. corporations.
Reports like this are frustrating to me because all listed companies and contractors that operate in these jurisdictions are on the same pot and painted with the same broad brush. Hopefully, Sop will have time to add his better informed comment; however, such expertise is not required to understand the report and the tables and charts will be of interest to any reader.
One of the staff’s favorite Gene Taylor speeches on the House floor:
Remarks for Eliminating Export Loans to Corporate Expatriate Companies
House of Representatives – July 15, 2004
The Congressional Record, Pages H5876
Mr. TAYLOR of Mississippi. Mr. Chairman, I hope that the fact that the gentleman from Arizona is so silent on this means he is going to jump up and support this amendment, because it makes such abundant sense.
I hear my colleagues saying why do we allow corporations to leave America, avoid paying taxes, and yet still receive all the benefits of being an American. It is because Congress lets them. It is time for Congress to close this door.
Right now there are 140,000 young Americans getting shot at every day in Iraq, paying their dues to be an American; and another 15,000 in Afghanistan paying their dues. As I have said a dozen times on this floor, those of us who are lucky enough not to have to fight this war, ought to be at least willing to pay for it. And those of us who are lucky enough to be Americans and enjoy all the privileges of being an American, such as this program, ought to be willing to pay the dues of being an American. And that is called paying taxes.
These folks cannot have it both ways, I would say to the gentleman from Arizona (Mr. Kolbe). If they want the Jamaican Coast Guard to come rescue them, let them be Jamaicans. If they want the Grand Cayman Navy SEALS to rescue their drilling rigs if they get boarded by terrorists, I say let the Grand Cayman Navy SEALS go rescue them, but not the U.S. Navy. And if they want a loan, a subsidized loan from a government, if they choose to be Jamaican or Bermudan, let them do so. But there is absolutely no reason for the taxpayers of this Nation, who pay their dues, whose kids serve in our military to subsidize these folks who want to play it both ways.
They do not want to pay their dues, but they want all the privileges of being an American. And I commend the gentleman for bringing this to the public’s attention.
Well said Gene and Brian!
Speaking on bealf of my clientele, some of whom have both served and paid in well over 7 figures in taxes I’ll add amen!
And folks take it form Sop, small business is the backbone of America and we pay our fair share (I mean pay). These sorry bastards Gene speaks of ruin the dream for all of us.
Open 5 year NOL carrybacks and allow unrestricted deductabilty of NOLS against futrure earnings and watch us fly……
Take what works and screw trhe rest. FWIW.
sop