A report by the Congressional Research Service (CRS) has found that U.S.-
based companies are increasingly shifting profits into tax havens. The CRS
analyzed profit data from multinational companies and compared reported
profits and other business activity in lower-tax jurisdictions versus higher-tax
countries like the United Kingdom and Canada.
The report found that significant shares of profits are being reported in tax preferred countries
and that these shares are disproportionate to the location of the firmís business activity as
indicated by where they hire workers and make investments. For example, American
companies reported earning 43% of overseas profits in Bermuda, Ireland, Luxembourg, the
Netherlands and Switzerland in 2008, while hiring 4% of their foreign workforce and making 7%
of their foreign investments in those economies. In comparison, the traditional economies of
Australia, Canada, Germany, Mexico and the United Kingdom accounted for 14% of American
MNCs overseasí profits, but 40% of foreign hired labor and 34% of foreign investment.