Companies Dodge $60 Billion in Taxes

Bloomberg is out with an interesting article this afternoon that says some U.S. Companies are using a tax dodge called “Transfer Pricing,” where they are allowed to legally avoid some income taxes by converting sales in one country to profits in another -- on paper only, and often in places where they have few employees or actual sales.

Companies that are currently know to use transfer pricing include Forest Laboratories (NYSE: FRX), Oracle Corp. (NASDAQ: ORCL) Eli Lilly & Co. (NYSE: LLY), and Pfizer (NYSE: PFE).

Despite President Obama’s promise to cut tax loopholes to bring home more tax revenue, this loophole remains open for mega-cap companies. It is estimated that the tax loss is in the neighborhood of $60 billion annual according to a study published in December in the National Tax Journal by Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.

“Transfer pricing is the corporate equivalent of the secret offshore accounts of individual tax dodgers,” said Sen. Carl Levin, a Michigan Democrat and chairman of the Senate’s Permanent Subcommittee on Investigations, in a statement to Bloomberg News.