Below you will find the U.S. mega-corporations who outsourced American jobs to Far East slave labor facilities where they could maximize their profits. That’s what mega-corporations do – maximize short term profits no matter the long-term consequences. That is all well and good. When these mega-corporations made these decisions, they knew the tax implications of repatriating those foreign earnings back to the U.S. – a 35% tax rate.
These fuckers can’t have it both ways. They gutted our manufacturing base and shipped it to the Far East, making hundreds of billions in the process. Their brilliant Ivy League educated MBA CEOs paid themselves hundreds of millions for a job well done. They knew the downside, but now they want their captured politician puppets in Congress to give them a tax break if they are kind enough to repatriate those hundreds of billions. They will use the cash to buy back their stock and pay their executives bonuses for successfully buying off Congress again. Our vulture capitalism system is something to behold.
According to a recent J.P. Morgan report, U.S. companies hold a combined total of more than $2 trillion in cash abroad. Among all S&P 500 companies, Apple has parked the largest amount of cash outside the U.S. by quite a margin. The iPhone maker hoards $158 billion (89 percent of its total cash) overseas. That’s almost twice as much as second-ranked Microsoft ($82.1b) and 2.5 times the total of General Electric, which is ranked third with foreign cash holdings of $62.4 billion.
Under current law, U.S. multinationals have little incentive to bring home the cash they hoard overseas, because they would have to pay 35 percent corporate income tax once they repatriate their foreign earnings. To address this issue, two senators proposed a repatriation tax holiday earlier this year, which would enable companies to return money to the United States paying just 6.5 percent tax, not 35 percent. The bipartisan proposal suggests the proceeds could help finance the Highway Trust Fund which is expected to run dry in May. It would also limit the use of the repatriated funds, prohibiting their use for stock buybacks or executive compensation and funneling them towards investment beneficial to economic growth in the U.S.
Although considered unlikely, it wouldn’t be the first time Congress passed a tax holiday for foreign earnings. In 2004, companies paid just 5.25 percent taxes on repatriated cash. However, a congressional subcommittee later found that the measure hadn’t been effective: many of the companies that profited most went on to cut jobs and reduce R&D spending in subsequent years.
You will find more statistics at Statista
Qualcomm , got one of those in my commercial truck. Had no idea this company was this big and wealthy.
Ah, but they CAN have it both ways and they will, because no one will do a damned thing about it, given that gov is bought and owned by those folks.
So many psychopaths that moved companies, offshore for short term profits.Not giving a flying fuck what it does to the U.S. in the long term. These people can eat shit and die.
Gee, maybe having the highest corporate tax rate in the world has ramifications. Who’d a thunk it? Maybe we should change our corporate tax rate to match that of, say, Canada.
I look forward to LLPOH’s comments on this.
He and strfcker had a nice back-n-forth over this similar topic not but a day ago(?).
It is clearly past time to be more responsible with our few dollars left, it is the only power we have of any consequence, and its diminishing (planned) rapidly.
Fuck every one of those corporations, they clearly do not give a fuck about anyone here.
Stop giving them money.
Start spending it on those whom count. Americas future depends on it.
Fucking evil Google is the toughest for me, they fucking own my dumb ass…but there is hope, 3 weeks ago I canceled my adwords account….next my corporate emails, suggestions are much appreciated.
What the fuck are these people thinking? Either pay your taxes or arrest the CEO for tax evasion, pure & simple.
@Otto: have you tried Bing instead of Adwords? You’ll get about the same # of clicks at a lower CPC.
Admin is obviously into the Communion wine again.
Nowhere do I see anything that says that the corps are lobbying for their to be a tax holiday. They quite possibly are but those facts are not in evidence.
Here are a few factoids for nitwits like westcoaster.
1) the taxes are not as yet owed – they were earned overseas, and until such time they are repatriated, no taxes are owed. So his idea of “throwing CEOs in jail” is beyond stupid, as they in fact have not committed a crime.
2) The US is the ONLY country in the world who attempts to do this – the ONLY one: tax companies on earnings made elsewhere in the world. It is absurd, and it puts the US at a complete competitive disadvantage.
And the Admin decries the evil corps for trying to get around the most absurd and immoral tax anomaly that exists anywhere on earth – the US trying to tax earnings made in another fucking country. It is the definition of obscene. They are attempting to cripple the economies of other nations – by stripping wealth out of those economies. If companies cave in to this, it would be impossible for companies to do business in other nations as they would be at such a competitive disadvantage as to make it impossible. As an example, if a US corp goes over to country X, with a tax rate of 10%, which every other company doing business has to pay, no matter where they are from (save the US, which fucks its citizens), and it has to pay 35% on its earnings – what are its chances of being successful, when everyone else pays 10%?
Come to think of it, the US the only country in the world that taxes its CITIZENS on money they make while living overseas. Does anyone see the absurdity of this? The US makes its citizens tax slaves – they tax you where ever you are, whether or not you are receiving any benefit whatsoever, and are the only country in the world to do it.
A few other little factoids:
First: Guess where all that money actually sits? It sits in US banks! Bwahahaha! It does not sit overseas – it sits safely in US banks! Lord have mercy! The money is in US banks, and is owned by entities residing outside the US.
So, where is the incentive for the corps to want to “repatriate it” that the Admin alludes to? The corps are having their cake and get to eat it too. They are not paying US tax on it, yet get to keep it in the US. That is priceless.
Second: guess how much tax would be realized by the totally ridiculous proposal to only charge 6.5% tax? My guess is zero, as the companies would get a credit for taxes already paid.
So, what is the answer to all this crap?
The answer is twofold. First, the US needs to drop its corporate tax rates so they are in line with that of the rest of the world. That would probably mean to 20% or so.
Second, to do the right thing, and to allow its corporations to actually compete overseas, it needs to ELIMINATE citizen based taxation (which applies to both citizens and corps). It is an obscenity that needs to be entirely eliminated, but I will not hold my breath.
The Admin, and others, decry the evil big corps for their actions. But entirely ignores the absurd laws that are in place which drive the corps to take the seemingly ridiculous actions in order to minimize the impact of these absurd laws.
And lets also talk about the reporting costs that exist if a company wants to repatriate the money into the US. They not only have to run tax accounts for the country they do business in, which in all likelihood in no way resemble the US tax system, they would then have to recalculate ALL of their earnings and expenses into the US tax reporting system. The cost of that would be enormous – millions, tens of millions perhaps even more of cost in order to run two accounting systems. It is far easier to not report in the US and leave the money overseas. Saves all the reporting costs, and also saves the the tax.
So, in my opinion, the Admin is trying to blame the corps for a problem that is not of their making. The problem is the tax laws and tax rates.
And guess what – if the US does not change the system, more and more corps will relocate their bases to overseas, where the only reporting and taxes they will have to do in the US is for money that they actually earn in the US. They will give the IRS the finger with respect to all the other money they earn.
You cannot make this shit up. The corps are simply responding to the most absurd corp tax laws in the world in a totally logical manner.
Repatriation Tax Holiday Would Lose Revenue And Is a Proven Policy Failure
By Chuck Marr and Chye-Ching Huang
Some policymakers are promoting another “repatriation tax holiday” to encourage multinational corporations to bring overseas profits back to the United States by offering them a temporary, very low tax rate on those profits. In particular, some have described a repatriation holiday as a “win-win” that would boost corporate investment and create jobs in the United States and also generate a tax windfall to help finance needed infrastructure spending. In reality, a repatriation tax holiday would accomplish neither goal and instead would worsen the nation’s fiscal and economic problems over time.
◾A repatriation tax holiday would lose substantial federal revenue and swell budget deficits, so it couldn’t pay for highways, mass transit, or anything else. Congress’ Joint Committee on Taxation (JCT) recently estimated that, while a second repatriation holiday (following the one enacted in 2004) would raise revenue for the first two years, it would cost $96 billion over ten years. Thus, rather than use the tax holiday to finance long-term infrastructure projects, the Treasury would have to borrow to pay for the tax holiday and then borrow again to pay for the infrastructure. (For more, see “Repatriation Holiday Costs Money So Can’t Offset Other Costs,” below.)
◾The 2004 tax holiday did not produce the promised economic benefits, and a second one likely wouldn’t either. Firms largely used the profits that they repatriated during the 2004 holiday not to invest or create U.S. jobs but for the very purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to shareholders. Moreover, many firms laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders. The top 15 repatriating corporations repatriated more than $150 billion during the holiday while cuttingtheir U.S. workforces by 21,000 between 2004 and 2007, a Senate Permanent Subcommittee on Investigations report found.[2] (For more, see “2004 Tax Holiday Failed to Generate Promised Economic Benefits,” below.)
◾A second tax holiday would increase incentives to shift income overseas. If the President and Congress enact a second tax holiday, corporate executives will likely conclude that more such tax holidays will come down the road, making these executives more inclined to shift income into tax havens (and hence less likely to invest in the United States). That’s why Congress, in enacting the 2004 tax holiday, explicitly warned that it should be a one-time-only event. (For more, see “Second Repatriation Holiday Would Be Even Costlier Mistake,” below.)
◾A tax holiday would not likely boost domestic investment by freeing multinationals from cash restraints. Proponents of a new tax holiday argue that large multinationals are cash-constrained and would make significant, job-creating investments in the United States if they had access to their overseas earnings. The large stock repurchases that some multinationals made in recent years, however, (1) show that they already have easy access to large amounts of domestic cash and (2) suggest that multinationals would likely use additional cash from repatriation for more stock buy-backs, rather than new investments. Indeed, the ten companies with the largest stockpiles of foreign profits paid out more than $107 billion in cash to shareholders through share repurchases in 2013, suggesting that they are not cash-constrained. Moreover, seven of the ten companies with the largest stockpiles of foreign earnings in 2013 also ranked among the top ten U.S. companies by share repurchases. (For more, see “Evidence Contradicts Claim That Multinationals Are Cash-Constrained,” below.)
◾Some of the biggest beneficiaries of a tax holiday would be firms that aggressively shifted income overseas. Technology and pharmaceutical companies have been particularly aggressive in shifting income abroad because they rely on intellectual property, which is relatively easy to shift to other countries to avoid taxes. Half of all repatriations from the 2004 tax holiday came from companies in these two industries. Large multinationals in the same industries would benefit disproportionately — and enormously — from a second tax holiday. (For more, see “Biggest Winners Would Include Firms That Have Aggressively Shifted Income Overseas,” below.)
U.S. companies face the highest official corporate tax rate in the world. But there’s a big difference between the rates set out by law and the cash that’s actually collected.
Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010, the Government Accountability Office said Monday.
The federal corporate tax rate stands at 35%, and jumps to 39.2% when state rates are taken into account. But thanks to things like tax credits, exemptions and offshore tax havens, the actual tax burden of American companies is much lower.
In a report commissioned by Senators Carl Levin (D-Mich.) and Tom Coburn (R.-Okla.), the GAO looked at taxes paid by profitable U.S. corporations with at least $10 million in assets.
Even when foreign, state and local taxes were taken into account, the companies paid only 16.9% of their worldwide income in taxes in 2010.
Coburn said in a statement that the report “underscores the need for comprehensive tax reform.”
“An individual’s or corporation’s tax rate shouldn’t be dependent on their ability to hire a tax lobbyist,” Coburn said. “It’s especially wrong to ask families who are struggling to make ends meet to subsidize special breaks for corporations.”
Llpoh
Please provide your source for declaring these hundreds of billions in cash are being held in the United States banks.
West- I have not tried it, but will look into it. I have lazily and sheepishly fallen into Googles black hole of convenience: Gmail, Googledocs, Adwords, the whole shebang, despite what they did here…. I should be flogged and banished.
I am repentant and will do better.
Thank you, much appreciated.
I notice that Iska’s comment gets thumbed down. Canada has a corporate tax rate of 15%, versus a rate of 35%. Gee, I wonder if this is an incentive for corporations to relocate out of the US and into Canada.
And people vote his comment down? I mean, how stupid can people be?
And not only is the Canada rate 15%, they will not try to tax the corporation on money it makes in say Uganda or Germany, unlike the US. Gee, wonder if that is an advantage. Sarc. off.
Can people not see why corporations are not liking the being located in the US? It is an extreme disadvantage, with little advantage.
Why doesn’t FATCA factor into this? How can so much money be kept overseas? I thought foreign banks are being held hostage by the IRS….
mick – the money is NOT being held overseas. The money is being held in the US.
Plus FATCA is a reporting mechanism – it requires banks to report US clients that have holdings in their banks. If the banks do that, that is the end of the story.
The hostage holding bit is that if the banks do not report their US clients, then they will have 30% of each of their transactions that flows through the US as a penalty. That is the hostage holding – report, or else we will take 30% of each dollar that passes through the US.
The tax holiday would not work. It is indeed bullshit.
From Admin’s post a couple above the article says:
“A second tax holiday would increase incentives to shift income overseas. If the President and Congress enact a second tax holiday, corporate executives will likely conclude that more such tax holidays will come down the road, making these executives more inclined to shift income into tax havens (and hence less likely to invest in the United States).”
That is bullshit. I mean, it would be IMPOSSIBLE to give corps more incentive to keep profits perched abroad (although actually banked in the US) than already exists. You simply could not design a system that makes for more incentive for a company not to repatriate its profits.
And re the fed tax rate, I again call bullshit. The effective tax rate they talk about is to divide the worldwide income reported on the consolidated statements by tax paid.
In other words, the company makes $100 in profits total worldwide, and $10 in profits in the US, where it pays $3.50 tax. Then everyone screams hey! they only are paying 3.5% tax (3.5/100)! And that of course does not even include the impact of the credits received for taxes paid overseas. There are statistics and then there are damn lies. The effective tax rate is one of the damn lies.
That is total bullshit as a number. Fact is, if you make $100 dollars profit in the US, you pay $35 dollars tax on it. Talking about taxes paid on world-wide earning when the earnings are not taxable until repatriated is total bullshit.
“So his idea of “throwing CEOs in jail” is beyond stupid, as they in fact have not committed a crime.”
What kind of a bullshit statement is that. Where the fuck did I say CEO’s have committed a crime?
Don’t put words into my mouth because your argument is so weak and pathetic. My lead in is absolutely true.
The laws and tax rates have been in effect for years. When they off-shored their operations, they knew the benefits and the downsides. They have gotten the benefits. If they want the cash back in the U.S., then they have to pay the piper. Tough shit. There are no surprises, whether it’s good policy or not.
You twist yourself into a pretzel with your defending of mega-corporation asshole CEOs.
Admin – the money being held in US banks is well reported. A quick search gave this quote at American Progress:
” these “trapped overseas” profits are neither overseas nor trapped. It is true that for accounting purposes, multinational corporations keep these dollars off of their U.S. books. But in the real world, the money is often deposited in U.S. banks, circulating in the U.S. economy, and available for a wide variety of domestic investments. For nearly all practical purposes, that money is already here, being put to work in the U.S. economy.”
From the WSJ:
“There’s a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas: A lot of it is actually sitting right here at home.”
http://www.wsj.com/articles/SB10001424127887323301104578255663224471212
I am winning! But of course I am.
Llpoh keeps dumping a load of shit about mega-corps making $100 of profit and paying $35 in taxes.
Simply fucking hysterical.
Their legions of tax lawyers and accountants and lobbyists whittled the actual taxes paid to $12.60.
Those are the facts. The 35% tax rate is a red herring. It is a joke.
Admin – that was directed at Westcoaster. He was the one who said throw them in jail. Thought I had made that clear. Maybe not.
No pretzel twisting here. The money is back in the US. How quaint. And no US tax paid on it.
The issue is they are going to keep moving their companies headquarters overseas so long as the ridiculous laws remain in effect.
Ok
I didn’t realize it was directed at Westcoaster.
The article is interesting. Good points:
The fact that much of the money already is in the U.S. also undermines a central argument made by companies seeking tax relief to bring home money they have earned abroad, tax experts and lawmakers say: That the cash is languishing overseas when it could be invested to the benefit of the U.S. economy.
U.S. companies are lobbying Congress to replace the current corporate-tax system with one that would tax only their domestic profits. Barring that, some say they would accept a tax on their repatriated earnings that is below the country’s current corporate-tax rate of 35% so they could use the funds to pay dividends, buy back shares or otherwise put it to work in the U.S.
The Senate’s Permanent Subcommittee on Investigations looked into the issue in 2011 and concluded a temporary tax break on foreign earnings wasn’t warranted. “The presence of those funds in the U.S. undermines the argument that undistributed accumulated foreign earnings are ‘trapped’ abroad,” the committee said in its report.
Admin keeps trying to suggest that corps can report $100 income on a tax return and only pay 15% on it. How ridiculous. It simply cannot be done. If your corp tax return says profit = $100, then you pay $35. End of story.
I explained how the number was reached – it is tax actually paid compared to world-wide income, much of which has not been declared in the US. I do not understand how that is so difficult to understand. It is a bullshit comparison.
They are twisting the numbers by including world-wide income that is not taxable until it is repatriated. They are comparing yearly corporate reports to tax paid, and the two are in way aligned.
“in no way aligned” last line above.
Llpoh
Here is a link to the GAO report which shows an EFFECTIVE tax rate (meaning taxes paid versus net income) for large corporations of 12.6%.
Corporate lobbyists have written the tax code to include loopholes, credits, deductions, and exemptions which drastically reduce what they actually pay.
Small corporations probably do pay 35%, but not the IBMs and GEs of the world.
http://gao.gov/assets/660/654958.pdf
Actual picture of Llpoh as Admin pummels him with data, facts and reason.
By the way, I did reference westcoaster re the throw them in jail response.
Ah, just like old times. Me and Admin. Him bleeding and holding his nuts. Me out for a morning stroll!
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Admin – you are right in general. The reality is the whole fucking system is screwed up. No one can make decent, logical rational decisions because the laws are so fucked up.
Lobbyists get tax breaks for certain industries. Corps have to translate and report foreign income into US accounting principles. The tax rate is too high. The benefits for corps bribing officials are too great. Et ad naseaum.
The entire system needs to be scrapped and started over. What, the current tax system is 17,000 pages or some horseshit. They cannot keep track of loopholes, and generate more by trying to cover up previous ones.
We all know corps are not benign little angels. The respond to incentive. If the Us wants to affect them, they have to give them the proper incentive. But the lobbyists are simply too effective to let real change happen.
I have missed our little debates! I figured this would provoke you! Good to see you come out of your mancave for a fight!
Hey! How come me kicking Admin in the nuts gets a thumbs down, and his poster showing me burst a gasket gets an uppy? Peons.
Llpoh
This was so civil, it was like having tea and crumpets. I think we’re losing it.
The tax code is a complete clusterfuck designed to benefit whoever pays the politicians the most.
The system will never be fixed from within. It’s too corrupt and too far gone.
I just wish the collapse would arrive, so I can scamper off to Australia and live in your guesthouse.
From Admins link, he inadvertently PROVES my point! Bwahahahaha!
For tax year
2010 (the most recent information
available), profitable U.S.corporations that filed a Schedule M3 paid U.S. federal income taxes amounting to about 13 percent of the pretax worldwide income that they reported in their
financial statements (for those entities included in their tax returns)When foreign
and state and local income taxes are included, the ETR for profitable filers
increases to around 17 percent.
Please note the little tidbit: WORLDWIDE INCOME. WORLDWIDE FUCKING INCOME!!!
Corps are paying US TAX equivalent to 17% of their WORLDWIDE fucking income. How many times do I have to say it???? You cannot use world wide income to get an actual picture of what percent they are actually paying on their US income. That percent is 35%. No way around it. So sorry.
But thanks for playing!
Newbies – this is civil!!
Admin and I (and whoever else was brave enough to play) used to kick the ever living shit out of each other. We would eventually huff off, pissed for days over it. And the OWS stuff was an absolute rip-snorting classic.
There was much to be learned. I have learned a deep and abiding hatred of banks from the Admin, for instance. I never knew they were such evil fucks. I thought they were just amoral like most other businesses. He proved me wrong.
I don’t like you living in Australia.
I’m beaten down by a long day, shitty commute, and running this two bit blog and you are just waking up, full of piss and vinegar and ready for a fight.
I need to debate you at 8:00 am my time.
Hell no – I need whatever advantage I can get. But tell you what, I will drink 6 big cans of Fosters to level the field.
This is one of my kangaroos – got into the good stuff, the little bastard:
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His buddy:
[img]http://t1.gstatic.com/images?q=tbn:ANd9GcTV3ONDucmXArCxcetBEbM8J44JhgCdgbfYCy5KsW-gra6jwys[/img]
Doan know if I would go quoting American Progress, lobbying think-tank funded, in part, by Soros.
To the best of my knowledge, the only business entity that exists today that was present at (or very near) the Founding, is a bank. The Bank of New York, founded by Alexander Hamilton, recently (IIRC) absorbed by another big bank. (Sorry folks, too tired to google a damn thing – just wanted to provide supporting evidence that banks suck, partially because, as a business entity, the lifetime of a bank is multi-generational)
KB – don’t know anything about them. Popped up on a quick search to answer Admin’s question. Bypass that one if you like, and see the one from the WSJ. Same info.
One further thought – the problems inherent in the multigenerational banks (and other industries, too) are compounded by their trans and supranational natures. Owing allegiance to none but the pursuit of every dollar of profit under the sun, their existence has become the technologically empowered Dollar Hooverers of modern times. Many of these companies are bigger than some of the host countries’ governments and the outlook – barring the unlikely enforcement of the Sherman Antitrust Act – is for them to get bigger. And bolder. And so on, in Perpetuity.
The WSJ, IIRC, is owned by another billionaire….Murdoch.
Point is, llpoh, they don’t want to pay any tax, nor do I, but they don’t support that across the board, and that includes small business such as yours.
KB – then do your own damn research!
I have. They want big gov. Just don’t want to pay for it. That’s for the sheople.