Corporations dodging taxes, asking for "tax holiday" to recapitalize US Market

[AZRedhawk44]

http://www.bloomberg.com/news/2011-06-28/biggest-tax-avoiders-win-most-gaming-1-trillion-u-s-tax-break.html

The example in this story is Cisco.

Basically, they have been holding all their international profits in Switzerland.

Reason?  They sold switches/routers to non-US customers.  They paid whatever tax rates are in place in those countries... UK, Russia, Germany, France, wherever.  Rather than paying the 35% tax rate to bring the money back into the US, they bank it in Switzerland and have mostly been sitting on it.

They're asking for a temporary tax holiday to move a trillion dollars back to the US at a 5% tax rate.

I'll tell you right now, no company in their right mind is going to repatriate a trillion dollars back to the US at a 35% tax rate.

And there are dozens of companies in this same situation.

I suspect they are able to use this money to purchase manufacturing supplies from their Swiss accounts and arrange for shipment to the US or other manufacturing facilities, paying the appropriate duties/tariffs when the goods arrive... which would be less than paying the 35% tax rate in place.

Frankly, I say give 'em the tax break.  Getting more honest capital back into the market (rather than Geitner's wonder-play-money from "Quantitative Easing") will do wonders for our economy and for domestic investment in new jobs.  Real jobs.

Lower taxes encourage the more frequent transfer of money.  Higher taxes encourage the holing up of money.

Let's bring the capital home.


ETA:  Sorry, I misread.  Cisco doesn't have a trillion offshore.  Cisco has about $30 billion offshore.  All combined, multinational corps are estimated to have a trillion offshore.

[makattak]

http://www.bloomberg.com/news/2011-06-28/biggest-tax-avoiders-win-most-gaming-1-trillion-u-s-tax-break.html

The example in this story is Cisco.

Basically, they have been holding all their international profits in Switzerland.

Reason?  They sold switches/routers to non-US customers.  They paid whatever tax rates are in place in those countries... UK, Russia, Germany, France, wherever.  Rather than paying the 35% tax rate to bring the money back into the US, they bank it in Switzerland and have mostly been sitting on it.

They're asking for a temporary tax holiday to move a trillion dollars back to the US at a 5% tax rate.

I'll tell you right now, no company in their right mind is going to repatriate a trillion dollars back to the US at a 35% tax rate.

And there are dozens of companies in this same situation.

I suspect they are able to use this money to purchase manufacturing supplies from their Swiss accounts and arrange for shipment to the US or other manufacturing facilities, paying the appropriate duties/tariffs when the goods arrive... which would be less than paying the 35% tax rate in place.

Frankly, I say give 'em the tax break.  Getting more honest capital back into the market (rather than Geitner's wonder-play-money from "Quantitative Easing") will do wonders for our economy and for domestic investment in new jobs.  Real jobs.

Lower taxes encourage the more frequent transfer of money.  Higher taxes encourage the holing up of money.

Let's bring the capital home.

Earliest that could happen is Jan. 20, 2013.

[Jamisjockey]

The current administration and it's lackeys have proven they do not understand how capitol works.  I don't even have faith that the next (R) in orfice would be willing to give them a break in hopes that they begin investing it here.

[roo_ster]

The current administration and it's lackeys have proven they do not understand how capitol works.  I don't even have faith that the next (R) in orfice would be willing to give them a break in hopes that they begin investing it here.

Just because John McCain was as economically illiterate as Obama & Biden is no...reason...to... 

...OK, I see your point.

[birdman]

We are also one of the only major countries that double-taxes repatriated corporate profit (taxes there, then taxes here), which is why the countires with that have had their corporate presence boom(Ireland) have reduced or eliminated their corporate taxes, and in many cases, eliminated repatatriation penalties.  Bringing income earned abroad back not only reduces true inflation (by increasing the domestic currency's value over the place where it was earned), but increases domestic capital availability (decreasing domestic costs), and allowing additional income due to improved ability to loan to other countries (strong domestic currency, high capital availability, net positive exports).  By taxing repatriated income, our already stupid double taxing of business profits turns into even more onerous TRIPLE taxing.