US companies stashed another $200 billion in profits overseas last year, escaping billions in taxes, and escalating a battle with Congress over the country's complex tax code.
The amount of unrepatriated foreign profits reached $2.4 trillion, according to Citizens for Tax Justice, allowing companies to avoid up to $695 billion in taxes.
The total for foreign profits is up from $2.2 trillion the previous year, according to the advocacy group which reviewed the Securities and Exchange Commission filings of Fortune 500 companies. Apple, Microsoft and Pfizer increased their stockpile of overseas profits the most.
The report highlights what has become a growing frustration for Congress: US companies have refused to bring the profits they earn overseas back home where they face the highest tax rate in the developed world, 35 per cent. Instead, hundreds of companies simply leave the funds overseas.
Some are waiting for Congress to lower the rate, or hoping for a window of amnesty.
But others are pursuing "inversions" in which they buy or merge with a smaller foreign company and move their headquarters overseas where they will be taxed less and can gain access to their unrepatriated foreign profits.
Lawmakers and the Obama administration have struggled to come up with a solution. In his latest budget proposal, President Obama calls for imposing a 19 per cent tax on foreign profits -- significantly lower than the current rate.
But there is little political momentum to address the issue during the 2016 presidential election cycle and Republicans and Democrats remain split on an approach.
"Stashing money offshore to avoid US taxes is hardly a victimless crime," said Bob McIntyre, director of Citizens for Tax Justice.
"Every dollar shifted to an offshore tax haven means less federal revenue to pay for the infrastructure, education and other public services that help our economy grow."
Business leaders have said that companies have few choices as long as the corporate tax rate remains high.
Many have called for broad tax reform. In the meantime, companies' unrepatriated income is widely expected to continue to grow.
Last year, Apple's unrepatriated profits reached US$200 billion, up from US$157 billion in 2014 and $111 billion in 2013, according to the report.
Microsoft's overseas profits stockpile reached US$108 billion last year, according to Citizens for Tax Justice.
Pfizer's unrepatriated income reached $193 billion last year compared with US$175 billion the previous year. The company announced last November that it would merge with Botox-maker Allergan and move its headquarters to Ireland. The deal is expected to lower Pfizer's corporate tax rate to 17 or 18 per cent, compared with its current effective 25 per cent rate. But it would also make it easier for the pharmaceutical giant to gain access to its overseas profits and could help it save about US$35 billion in taxes.
Wisconsin manufacturer Johnson Controls announced last month that it would merge with Tyco International and also move its headquarters to Ireland.
That is expected to save the company US$150 million a year in taxes and make it easier for it to access US$8 billion in unrepatriated income.