Tax watchdog group: AZ companies keeping money offshore - WFSB 3 Connecticut

Tax watchdog group: AZ companies keeping money offshore

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A local tax watchdog group looked at annual tax filings for Fortune 500 companies and found many players in Arizona are keeping money offshore to avoid paying the piper.

"You shouldn't be able to get a free ride," said Dan Smith with Arizona Public Interest Research Group. He said companies like Apple, Intel, Honeywell all use the tricks of the trade, costing Arizona $286 million in lost state tax revenue.

"Every dollar that companies avoid in taxes has to be balanced by average taxpayers paying higher taxes or face cuts to public programs or a higher deficit," Smith said.

PIRG found that Tempe-based IT company Insight Enterprises books $72 million offshore in places called Switzerland and the Netherlands. Phoenix-based electronic distribution company Avnet keeps nearly $920 million in places like the British Virgin Islands.

"Corporations are under tremendous pressure to keep their corporate profits up, provide returns to shareholders, so they're going to follow a path to tax avoidance," said Greater Phoenix Economic Council CEO Barry Broome. He said the tax output of these companies still has a huge effect on the local economy. He said they shouldn't be blamed - the tax code should.

"The question for people in Arizona is do you want these companies deploying capitol and creating jobs, or paying higher than normal taxes?" Broome asked.

Glynis Bryan, the Chief Financial Officer for Insight Enterprises, sent us the following statement:

We do not operate in any zero tax rate jurisdictions. Our effective corporate tax rate for 2013 was 38.0%. While some of the countries we do business in may be considered tax havens in that they offer certain tax advantages if companies are structured in a certain way, we are not utilizing such structures in any of these countries and as such, are paying full corporate tax rates in all such countries.

A spokesperson for Avnet sent us the following statement:

As a leader in technology distribution, Avnet has expanded its global footprint to more than 80 countries as part of our profitable growth strategy primarily through acquisitions. The majority of our revenue now comes from overseas operations, and more than 60 percent of our staff resides outside of the U.S. As a result, our finances are managed globally and funds are invested in regions where needed on a daily basis.

"The PIRG report is factually inaccurate in reporting that Avnet held $2.7 billion in cash offshore," stated Kevin Moriarty, Avnet's Chief Financial Officer. "As reported in our 2013 Form 10-K, Avnet held $918.4 million in cash outside of the U.S. Avnet is not holding these funds overseas to avoid paying U.S. taxes. Those funds are used for ongoing working capital, capital expenditures and to support acquisitions by all of our 248 foreign subsidiaries, not just the 50 subsidiaries that PIRG chose to characterize as ‘tax haven subsidiaries' without regard to whether they were operating entities. Our effective income tax rate in our most recent quarter was 31%, in line with the U.S. federal corporate income tax rate of 35%."

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