The Paradise Papers cast a spotlight on the increasingly vast hoard of cash that U.S. companies are stockpiling offshore to avoid a tax hit.
Leaked from international tax firm Appleby Global, the documents detail the steps that companies such as Apple (AAPL) , with a quarter of a trillion dollars outside the U.S., and others take to reduce exposure to tax bills. They also raise the question of whether the Trump Administration can pass a tax package that includes a holiday on overseas cash--or come up with another policy to bring funds to the U.S.
"I do think the Administration is sympathetic and empathetic with the competitive constraints around the U.S. tax code and may be [compelled] to use the Paradise Papers, as it were, as justification for moving forward and making the U.S.'s tax policies less disadvantageous for corporations," said Fitch Ratings analyst Jason Pompeii.
"Tax reform should relieve some of the pressure, but probably not all of the pressure to be clever to minimize your taxes," he said, though it would not eliminate the process. "Minimizing taxes is part of what corporations do and they will continue regardless of whether we have tax reform or not."
Apple maintains that it gives the tax man his due.
"Apple is the largest taxpayer in the world, paying over $35 billion in corporate income taxes in the last three years," that company said in a press release Monday. "Apple pays taxes in every country where we sell our products."
The company said its global tax rate of 24.6% is above average.
If Trump and Congress enact a tax holiday, Pompeii suggested that companies would participate. Much of the funds would likely go to debt repayment and to shareholder returns via stock buybacks or dividends, he added.
