Foreign companies grow profits, taxes
Welcome to America! Here’s your bill.
The Internal Revenue Service this week released a report (link to .pdf file) showing major growth in U.S. companies owned by foreigners. The report also showed that those foreign-controlled domestic corporations, as the IRS refers to them, are paying a growing share of corporate taxes.
There were 61,820 domestic corporations controlled by a foreign person for Tax Year 2005, the agency said. Those foreign-controlled domestic corporations accounted for just 1.1 percent of all U.S. corporations. However, those corporations generated $3.5 trillion of total receipts with $9.2 trillion of total assets, accounting for 13.7 percent of the receipts and 13.9 percent of the assets reported on all U.S. corporation income tax returns.
Other tidbits in the latest Statistics of Income Bulletin (all following links to .pdf files):
– Foreign corporations controlled by U.S. multinational corporations: For tax year 2004, these controlled foreign corporations held $9.2 trillion in assets and reported $3.8 trillion in receipts.
– Corporations that claimed the foreign tax credit on their U.S. tax returns: For tax year 2004, corporations claimed foreign tax credits worth $56.6 billion, representing an all-time high and a 13.2 percent increase over the previous high amount in 2003. Use of this credit reduced their U.S. tax on worldwide income by 30.2 percent, from $187.5 billion to $130.9 billion.
– Growth trends in the number of partnership and sole proprietorship returns: While the number of partnership returns filed between 2002 and 2005 increased by 23 percent, the number of sole proprietorship returns increased by 1.9 percent.
– Federal gift tax returns filed for gifts given in 2005: Americans reported $38.5 billion in cash and other asset transfers. Almost 3 percent of gift tax returns were taxable with $1.7 billion in reported tax liability.
– Use of business credit for research activities: Corporations claimed almost $6.4 billion in these credits for tax year 2005, and corporations in the manufacturing industries claimed more than 70 percent of this amount.
Don Mecoy
Business Writer
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