US Firms Buck $60B in Taxes With Foreign Money Shuffle
'Transfer pricing' sends profits overseas—on paper only
By Kevin Spak,  Newser Staff
Posted May 14, 2010 10:51 AM CDT
Companies are hiding their profits by moving them overseas.   (Shutterstock)

(Newser) – Lexapro, one of the world's best-selling antidepressants, is made by an American company and sold exclusively in the US, but the US doesn't see a penny in tax revenue when you buy a bottle. Instead, your money goes around the world as part of a complicated transaction dubbed the “Double Irish,” Bloomberg reports. Corporations routinely use such schemes, which involve converting sales in one country into profits in another—at least on paper.

The US loses about $60 billion in tax revenue a year to such “transfer pricing” deals, according to one study. “Transfer pricing is the corporate equivalent of the secret offshore accounts of individual tax dodgers,” says Carl Levin, one of several lawmakers who'd like to crack down on the practice. Even tax-hating Tea Partiers can agree on the issue—the head of one Memphis group said he found the dodge “problematic.”