Show Us the Money – Fortune 500 Companies Keep $2.1 Trillion in Offshore Tax Havens

Fortune 500 companies hold more than $2.1 trillion in profits offshore to avoid US taxes that would amount to an estimated $620 billion tax bill, according to a report by the public interest research and advocacy organization, Citizens for Tax Justice (CTJ).

The study used the companies’ public financials filed with the Securities and Exchange Commission to reach their conclusions. Nearly three-quarters of the firms on the Fortune 500 list of top American companies according to gross revenue maintain tax havens in countries like Singapore, Cayman Islands, Bermuda, Switzerland, Ireland, Luxembourg, and the Netherlands.

Parking money overseas means the companies defers their tax bill until they repatriate the money back into the US. Companies avoid paying taxes by booking profits to a tax haven because US tax laws allow them to defer paying taxes on profits that they report are earned abroad until the money comes back to the United States. But there are no deadlines to when the profits should be repatriated, meaning the profits can sit overseas, tax-free, indefinitely.

What makes the whole situation more egregious is that profits booked as offshore often remain onshore. There is not an imaginary stockpile of billions sitting in an account in Bermuda. Most of the profits reported as overseas are earning interest in US banks or invested in onshore assets but are registered to foreign subsidiaries.

According to the study, the top Fortune 500 offenders include:


  • Apple holds $181.1 billion offshore through three tax havens.
  • General Electric has $119 billion offshore in 18 tax havens.
  • Microsoft is holding $108.3 billion in five tax havens.
  • Pfizer has $74 billion distributed through 151 subsidiaries.
  • Google reported operating 25 subsidiaries in tax havens in 2009, but the CTJ’s findings discovered that Google only discloses two in Ireland. The amount of cash the company reported offshore grew exponentially from $7.7 billion to $47.4 billion.
  • PepsiCo kept $37.8 billion offshore through 132 subsidiaries in offshore tax havens.
  • Bank of America reported having 264 subsidiaries in 2013 but disclosed only 22 in 2014, holding $17.2 billion offshore.
  • American Express has reported $9.7 billion offshore through 23 subsidiaries.
  • Nike holds $8.3 billion offshore through three subsidiaries.
  • Morgan Stanley holds $7.4 billion offshore via 210 subsidiaries.
  • Walmart reported operating no tax havens yet the CTJ found them to have 75 tax haven subsidiaries not included in its SEC filings. According to the report, “Over the past decade, Walmart’s offshore income has grown from $6.8 billion in 2005 to $23.3 billion in 2014.”

“At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014,” the study reported.

There are no incentives for these companies to repatriate the money and pay US taxes, therefore, the money “sits” overseas. Earlier this year Obama proposed a 14 percent mandatory tax on the stockpiled profits and a 19 percent minimum tax on foreign earnings going forward which has met with opposition from Congress.



ConAgra to Move HQ to Chicago

Food giant ConAgra recently announced that it is leaving its long-time home of Omaha and relocating the company’s international headquarters to Chicago. The maker of such popular brands like Bertolli pasta sauce, David seeds, Banquets microwaveable dinners, and Orville Redenbacher is looking to take advantage of the city’s international appeal, world class dining and entertainment, two of the busiest international airports in the country, and most importantly a deep and diverse talent pool. After being headquartered in Omaha since 1922, the company is relocating for good.

ConAgra products are a staple of the American diet. Almost every fridge and pantry in the country has Hunt’s tomato products, Wesson vegetable oil, or Hebrew National hotdogs. However, recently sales have been stagnant, as corporate misadventures like the acquisition of private label food maker Ralcorp and changing consumer tastes have taken their toll on the company’s bottom line.

Now, the company is looking for a deeper talent pool to revive its brands. Chief Executive Officer Sean Connolly, a former executive at another Chicago food company Sara Lee, recently stated “Chicago is an environment that offers us access to innovation and brand-building talent” to justify the move.  The company will need to study consumer tastes and preferences, and that is easier in an environment with access to innovation and brand building talent. Chicago is home to the world’s leading food production companies like the newly merged KraftHeinz, Armour meats, Nabisco, Wrigley, Mars, and Quaker Oats. These companies see a constant flow of talent, ranging from careers veterans with industry insight, to millennials in tune with viral marketing and the latest food trends. Eric Thompson, economics professor at the University of Nebraska in Lincoln said “if you are in a city with multiple corporate headquarters, you have a deeper talent pool. We have very talented people here [in Nebraska], just not as many as Chicago.”

Human resources professionals often find it difficult to attract new talent in metropolitan areas the size of Omaha.  Young, educated adults often leave their home towns for larger cities like New York and Chicago, or even the mid-sized Kansas City and Denver. As a result, recruiters frequently find themselves sorting through the same stack of potential candidates for every occupation.

Poaching professionals from other markets is not always easy. Few are drawn to Omaha’s famous low cost of living and still demand a premium to relocate. This often makes the candidates too pricey for companies with lean budgets like ConAgra.  Furthermore, candidates frequently show interest in relocating, only to change their minds as the hiring process advances. “At least once every few weeks I interview a candidate that shows interest in moving, but changes his mind when it is time to schedule the second interview” said Vito Clark, a recruiter at an Omaha-area logistics company. “And we are offering pay well above Omaha’s normal range” said Clark. Chicago solves this problem for ConAgra. The city is bursting at the seams with newly minted college grads. Hopefully, ConAgra can tap this talent pool to revive its brands.

Top 3 Urban Neighborhoods to Invest in Now

Across the country, Americans are rediscovering the benefits of urban living. As a result, some neighborhoods are experiencing rising rents and property values. Smart and savvy property investors are in a position to benefit from these trends. The following 3 urban neighborhoods provide excellent growth potential for property buyers.

Seattle – Zip Code 98108 (Beacon Hill)

The southeast Seattle neighborhood is bordered by Interstate 90 to the north, Interstate 5 to the west, Rainier Avenue to the east, and Martin Luther King Junior Way to the south. It has been named one of the Great Places in America by the American Planning Association (APA). The quaint neighborhood is known to locals for its turn of the 20th century homes, walkable streets, craftsman bungalows, and box houses.

In the 50s and 60s, Beacon Hill was nicknamed “Boeing Hill” due to the large number of the company’s employees residing in the area. However, many employees moved to the suburbs in the decades to follow. Newly arriving immigrants looking for good schools and a convenient location moved in.  Today, the neighborhood is home to significant Chinese, Filipino, Vietnamese, and Korean communities.

Rents across Seattle have experienced rapid growth. As a result, Beacon Hill is seeing an influx of artists, professionals, and young families looking for urban amenities in a convenient location. Plenty of opportunities remain and investors can reap significant returns by accommodating the increase in demand.

Austin – Zip Code 78702 (Central East Austin)

Austin’s 78702 is bound by Lady Bird Lake to the south, Martin Luther King Jr Boulevard to the north, Interstate 35 to the west, and Airport Boulevard to the east.  Locals have flocked to the area for years to visit the George Washington Carver Museum, Swedish Hill Historic District, and Lady Bird Lake for fishing and bird watching. Now, the neighborhood is experiencing rapid residential growth. Newly minted professionals in one of the nation’s fastest growing cities are drawn to the neighborhood’s downtown location and proximity to Lady Bird Lake, a scenic reservoir on the Colorado River.

Chicago – Zip Code 60626 (Rogers Park)

The Rogers Park neighborhood on Chicago’s lakefront experienced rapid growth during the condo boom as landlords converted vintage 1920s 3-flats and 6-flats to condos. However, the bust in 2008 depressed values and left many under water. Prices have since stabilized. 60626 even experienced one of the biggest drops in negative equity in Chicago, an indication of looming property value increases.

The north side neighborhood is bordered by Chicago’s exclusive North Shore suburbs to the north, booming Little India to the west, Edgewater and trendy Andersonville areas to the south, and the beaches of Lake Michigan to the east. It is also home to Loyola University and a short elevated train ride from Northwestern University, making it a popular neighborhood for college students and professors.

Residents enjoy many of the neighborhood’s independently owned coffee shops, family run taquerias, and theatre venues. Downtown professionals find Rogers Park especially convenient. Though geographically farther from the city center than some other desirable areas, the local commuter train takes less than 20 minutes to arrive in Chicago’s central business district from the Rogers Park stop.

Rogers Park, relatively speaking, is still an island of affordability surrounded by some of the area’s most expensive real estate. The high volume of rental stock has kept prices in check, but the window for investment is quickly closing as local developers have pegged the area for rapid property growth in the near future.