How Much Cash is Nike Parking Offshore?

A new report released today shows the extraordinary loss of federal tax revenue—about $100 billion a year—that can be traced to large U.S. corporations parking profits earned in this country in overseas tax havens such as Bermuda and the Cayman Islands.

The report, produced by the U.S. Public Interest Research Group, the Institute on Taxation and Economic Policy and Citizens for Tax Justice, highlights the cash horde American's largest 500 publicly traded companies are holding in tax havens: an estimated total of $2.5 trillion.

The report comes at a moment when corporate taxation is front and center in Oregon.

The most contentious issue on the November ballot, Measure 97, would tax C corporations (large companies, often publicly-traded) 2.5 percent of their Oregon sales over $25 million.

One of the arguments proponents of the measure make is that large companies have found numerous ways to avoid paying taxes in recent years. Today's report buttresses that argument, although opponents of Measure 97 point out it would levy a tax on gross sales not on profits.

Among the companies highlighted in the new report is Nike, Oregon's largest publicly traded company. The sneaker and sportswear giant's overseas stash is only a fraction of the biggest users of tax havens—Apple, which holds $214.9 billion offshore, and the drug company Pfizer, which holds $193.6 billion offshore—but its tax savings are still enormous.

Here's what the report said about Nike:

" The sneaker giant officially holds $10.7 billion offshore for tax purposes on which it would owe $3.6 billion in U.S. taxes. This implies Nike pays a mere 1.4 percent tax rate to foreign governments on those offshore profits, indicating that nearly all of the money is officially held by subsidiaries in tax havens. Nike likely does this by licensing several trademarks for its products to three subsidiaries in Bermuda and then essentially charging itself royalties to use those trademarks. The shoe company, which operates 931 retail stores throughout the world, does not operate one in Bermuda and one of the largest department stores in Bermuda, A.S. Cooper and Sons, does not list Nike as a brand that it offers."

Nike spokesman Greg Rossiter says the report's assertion that the company parks non-U.S. intellectual property in a Bermuda subsidiary to avoid taxes is not true. Instead, such intellectual property is owned by Nike in the Netherlands, where the company has 2,500 employees and its European headquarters.

"We fully comply with tax regulations and we rigorously ensure our tax filings are fully aligned with the economic substance of how we run our business, the investments we make and the jobs we create," Rossiter said in a statement.

Willamette Week