Fortune 500 Parking $1.6 Trillion Overseas, Theoretically Enough To Cover Bush Tax Cuts: Report

FILE - In this Wednesday, Sept. 12, 2012, file photo, Apple CEO Tim Cook speaks following an introduction of the new iPhone 5
FILE - In this Wednesday, Sept. 12, 2012, file photo, Apple CEO Tim Cook speaks following an introduction of the new iPhone 5 in San Francisco. Apple is emerging as a gentler, cuddlier corporate citizen in the year after the death of CEO and co-founder Steve Jobs. CEO Tim Cook's announcement that the company is moving a Mac production line to the U.S. is just the latest step in a charm offensive designed to soften Apple's image. (AP Photo/Eric Risberg)

While Washington freaks out about the budget deficit, a corporate money mountain matches the $1.6 trillion President Obama wants in tax hikes. Theoretically, taxes on that mountain could cover the cost of making the Bush tax cuts permanent.

But that money mountain is overseas, and corporations are scratching and clawing to keep it there, untaxed, forever -- even as they plead for a solution to the "fiscal cliff" and a long-term deficit-reduction plan.

A little more than half the companies in the Fortune 500 have at least $1.6 trillion in untaxed profits parked offshore, according to a new study by the nonprofit group Citizens for Tax Justice, which looked at the financial filings of 290 of the Fortune 500. Just 20 of those companies, including multinational behemoths like Apple, GE and Microsoft, have nearly half of the total, or $794 billion, in untaxed offshore profits.

The CTJ study is consistent with another study done recently by Reed College economics professor Kimberly Clausing, which estimated that U.S. companies have $1.7 trillion held overseas to avoid taxes.

If the federal government could tax that $1.6 trillion at the statutory 35 percent tax rate, then it could raise $560 billion -- more than enough to cover the cost of making all of the Bush tax cuts permanent.

The government isn't able to tax that money at 35 percent, of course, partly because companies can deduct the amount of money they have already paid overseas. After all, nobody wants to tax companies twice for the same income. The trouble is that these companies never bring that money back home, in order to avoid giving the IRS its taste. Congress has given them a temporary pass on bringing those profits home, a temporary pass it has renewed every year since the 1980s, as the Huffington Post's Ben Hallman noted recently.

Companies are fighting to lower the U.S. statutory corporate tax rate, and President Obama has at times agreed with them. The idea is that maybe companies wouldn't keep so much money stashed overseas if tax rates at home were lower. The problem with this theory, notes the CTJ, is that the U.S. cannot possibly lower tax rates enough to match those of offshore tax havens.

That's because the tax rate in those havens is zero.

As the Huffington Post has reported, companies are also fighting tooth and nail to avoid ever having to pay U.S. taxes on their overseas profits. Some want a permanent deferral of tax payments on overseas profits. This would at least help avoid the aggravation of having to get Congress to pass a "temporary" deferral every year.

If that doesn't fly, as The Huffington Post has also reported, then companies would like to change to what's known as a "territorial" tax system, which would be practically the same thing: Companies wouldn't have to pay any U.S. taxes on overseas profits as long as they could prove they paid foreign taxes.

And those foreign taxes are very nearly nothing. Apple, for example, paid just 1.9 percent in foreign taxes in its latest fiscal year, according to financial filings. The prior year, it paid a 2.5 percent rate.

And many of these same companies are pushing for these tax breaks at the same time they loudly push for a bipartisan solution to the "fiscal cliff" of tax hikes and spending cuts due to take effect next year. Many are also part of the Pete-Peterson-funded "Fix the Debt" campaign pushing for a bipartisan solution to the terrible problem of the federal budget deficit.

A study by the liberal Institute for Policy Studies found that 63 of the companies advocating for a fiscal-cliff deal would save $134 billion in taxes if a territorial-tax system is adopted. That's more than enough to cover the cost of tax cuts for households making more than $250,000.