U.S. companies led by General Electric Co. (GE) and Pfizer Inc. (PFE) stockpiled an additional $187 billion in untaxed overseas profits over the past year, boosting their offshore holdings by 18.4 percent, according to data compiled by Bloomberg.
The 70 U.S.-based companies studied hold $1.2 trillion in profits around the world. GE and Pfizer have built up the most money outside the U.S., at $102 billion and $63 billion respectively, according to securities filings. Apple Inc. (AAPL), Google Inc. (GOOG) and Microsoft Corp. (MSFT) were among the companies that increased their accumulated overseas profits by more than 40 percent in 2011.
As U.S.-based companies expand globally, they keep profits overseas, legally out of the reach of the Internal Revenue Service. Lawmakers from both political parties point to the stockpiling as a symptom of a failed corporate tax system, even while they remain deadlocked over whether the U.S. should impose higher or lower taxes on its companies’ global profits.
“You’re seeing more and more business go on overseas, because that’s where an increasing amount of the global purchasing power is,” said Matt Miller, director of public policy at the Business Roundtable, a Washington-based association of chief executives at large companies that backs lower taxes on overseas profits. “We need to get a competitive tax system that is not antiquated and has all the complexities we have today.”
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