Academic journal article Journal of Accountancy

U.S. Subsidiaries Are Paying More Taxes

Academic journal article Journal of Accountancy

U.S. Subsidiaries Are Paying More Taxes

Article excerpt

Federal income taxes paid by U.S. subsidiaries of foreign companies increased substantially in 1992, according to a study by the Barents Group LLC of KPMG Peat Marwick, Washington, D.C. The study, based on the Internal Revenue Service's most recent data, showed that the tax liability for U.S. subsidiaries increased by $1 billion in 1992, a 17% increase over 1991 levels.

The study blamed the 1991 drop from 1990 levels on the severity of the recession. "Even though the recession extended into early 1992, for the year as a whole it was the beginning of the recovery," the report said. The increase was widespread, with a large jump in each sector, according to the report. The U.S. subsidiary finance, insurance and real estate taxes increased by 29%; wholesale trade sector taxes increased by 22%; and the manufacturing sector anted up 6% more.

"The data are being discussed because there have been recent debates on whether foreign corporations are paying their fair share of taxes," said Linden C. Smith, managing director of the Barents Group. "The data show how these companies have worked their way out of the recession, and I expect the numbers in the 1993 and 1994 data also to show an increase in taxes and net income for foreign companies. …

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