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Joe Biden tells supporters he intends to run in the 2020 presidential election. Also, on the Wednesday rundown: A landmark bill in California would ban toxic chemicals in cosmetics; and, groups sue to end disease-spreading elk feeding.

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Study: Price Tag of Offshore Tax Havens in the Billions

Research suggests legal offshore tax havens are costing U.S. taxpayers billions of dollars a year. (Greg Stotelmyer)
Research suggests legal offshore tax havens are costing U.S. taxpayers billions of dollars a year. (Greg Stotelmyer)
April 18, 2016

FRANKFORT, Ky. – According to a new study, nearly three quarters of all Fortune 500 companies use legal techniques to hide income overseas and cut their tax bills.

The Offshore Shell Games report comes from the U.S. Public Interest Research Group (PIRG) and Citizens for Tax Justice.

Ana Owens, a tax and budget advocate for U.S. PIRG, says out of those 350 or so companies, PIRG was able to figure out how much 56 of them saved. Just those corporations, the total was $170 billion a year.

"That would be equal to the entire state budgets of California, Virginia and Indiana combined,” she points out. “While everyone is doing their taxes, these multi-national corporations are really putting the burden on average Americans."

Some of the firms defend the practices as totally legal, and say they would be foolish not to use the tax shelters when their competitors do.

Of the five Kentucky-based companies on the Fortune 500 list, the report found Yum Brands had the most tax haven subsidiaries, 70 in 11 countries, with $2 billion held offshore.

Owens says many of the corporations are based here and do business here – taking advantage of America's business climate, workforce and consumers. But she says legal fictions allow them to pretend they're making their money overseas.

For example, she says they can set up a shell company in the Cayman Islands and transfer the patents for their most profitable products to that firm.

"Then when they sell that drug or that piece of technology in the U.S., their U.S. company has to pay their foreign subsidiary the licensing fee,” she points out. “On paper they're losing money in the U.S., when really they're just shifting their profits offshore."

Owens says a bill in Congress called the Stop Tax Havens Abuse Act could close many of those loopholes. She says many people are also pressing for comprehensive tax reform next year, although it is likely to be a struggle.

Greg Stotelmyer , Public News Service - KY