A new leak of millions of documents revealing the tax avoidance strategies of power players worldwide is putting pressure on the U.S. tax reform movement.

The “Paradise Papers” leaked and analyzed by the International Consortium of Investigative Journalists exposes the tax planning and engineering strategies of more than 100 multinational companies, including Apple, Nike, Uber, and Allergan, to avoid paying corporate income tax in the United States. ICIJ says Apple, for example, has relied heavily on restructuring business and transferring intangible assets into lower-rate jurisdictions.

Apple has already come under fire for attributing billions in profits to subsidiaries in Ireland, where companies often are able to escape Irish income tax by demonstrating to authorities that they manage and control the business from another country. Apple’s indefinitely reinvested foreign earnings — earnings held outside the United States, so not subject to U.S. tax until repatriated — have jumped since 2008 more than IRFE of any other U.S. company, according to an analysis by Audit Analytics.

Apple has increased its IRFE by more than $100 billion over 8 years, the firm says. Across U.S. companies, an estimated $2.8 trillion is being held overseas, where companies assert it is indefinitely reinvested, which enables it to escape any U.S. corporate income tax.

The proposal for comprehensive tax reform recently unveiled by the Ways and Means Committee of the U.S. House of Representatives would lower the U.S. corporate tax rate of 35 percent, the highest in the industrialized world, to 20 percent. The proposal would also move the United States away from a worldwide tax system, where companies would pay income tax on all income earned abroad when it is repatriated, favoring a “territorial” tax system that would eliminate that double taxation. Policymakers are banking on U.S. companies returning more of their foreign-earned income to the United States if it were no longer subject to that extra layer of tax.

Now the Paradise Papers leak is putting some pressure on Congressional leaders to think hard about the ways in which companies have maneuvered their businesses and their income to avoid all U.S. tax. The stories raise questions about how the tax measures currently proposed by Congress will address use of offshore tax havens to escape U.S. tax, says the Financial Accountability and Corporate Transparency Coalition.

Republican leaders say their tax reform package would levy a 20-percent excise tax on some payments U.S. companies would make to foreign affiliates and a low-level tax on some foreign profits, curbing the potential for many of the traditional profit shifting maneuvers. 

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