Five of New Jersey’s largest companies collectively had $122 billion in offshore profit holdings in 2012 -- an increase of 21.3 percent over last year, according to a report by Citizens for Tax Justice in Washington, D.C.
The five corporations -- Merck, Johnson & Johnson, Honeywell International, Cognizant Technology Solutions, and Becton Dickinson -- were among 92 companies nationwide that saw their offshore profits grow by $500 million in the past year, to a total of $1.4 trillion.
By parking profits overseas, companies can avoid paying some taxes. Under current law, “foreign” corporate profits are not subject to U.S. tax unless and until the profits are repatriated into the United States, according to New Jersey Citizen Action, which released the report on Wednesday.
According to the congressional Joint Committee on Taxation, this indefinite deferral of tax on profits ostensibly earned or shifted overseas will cost the federal government about $600 billion over the coming decade. There is legislation in Congress sponsored by Sen. Bernie Sanders (I-VT) that would end this practice.
NJ Citizens Action says that lobbyists for multinationals are urging Congress to make the loophole even bigger in upcoming tax reform talks, which would make it easier for companies to shift jobs and profits out of the country.