Skip to main content

View Diary: Corporations Repatriating Cash After Dodging Tax Laws (47 comments)

Comment Preferences

  •  That one (1+ / 0-)
    Recommended by:
    The Anomaly

    is particularly persistent, from what I've observed over the last several years.

    Just sayin'...

    •  You are welcome to bash me (0+ / 0-)

      but if you'd actually bother to look into the realities of the Pharmaceutic Industry, you might have your eyes opened to the realities of that business - namely that *everyone* is laying off massive numbers of people:

      The situation at these two companies isn't much different than what the pharmaceutical world has been going through already. Following are some highlights of the huge layoffs in 2009:

      •Pfizer (PFE) appears to have topped the job-slashing list with 19,500 cuts.
      •Merck (MRK) followed closely with 16,000 positions lost.
      •Johnson & Johnson (JNJ) announced 7,000 to 8,000 layoffs in November, adding to earlier 900 sales jobs cut.
      •AstraZeneca is now adding to the 7,400 positions it eliminated in 2009.
      •GSK, too, is adding to earlier cuts of 6,000, including 2,000 sales jobs in the U.S.
      •Eli Lilly (LLY) added 5,500 people to the ranks of the unemployed.
      •Medtronic (MDT) said last May that it's reducing headcount by 1,500 to 1,800.


      •  and none of that (0+ / 0-)

        changes the facts in this diary.

        •  But it totally changes the interpretation of the (0+ / 0-)

          "facts" presented in the diary.

          Perhaps it is a "fact" the repatriated money was used for mergers.  But if that merger had occurred anyways, it's difficult to work up the amount of outrage that was generated.

          Any open minded person would see that there are different ways to look at this issue, for example, this way:

          Imagine if American companies could add more than $1 trillion to their domestic coffers in an instant without selling a subsidiary, issuing a single share or incurring a penny of debt.

          While every company would no doubt use this cash differently, the windfall could fund a return of capital to shareholders through increased dividends and share buybacks. Or it could be used to repay debt, fund capital expenditures or make strategic acquisitions.

          The important thing is that the cash would be put to work. So why hasn't this already happened?

          The answer is clear: U.S. tax policies penalize the repatriation of so-called foreign-source income, essentially the profits earned by foreign subsidiaries of American corporations. This cash pile isn't being hoarded or held on the sidelines, as many pundits have suggested; rather, it is being kept offshore by our own tax structure.

          Unlike most countries, the United States taxes the profits earned overseas by its corporations. The federal tax code defers the tax on nondomestic profits until the corporation brings those profits into the country. Since repatriating these profits means incurring a tax of as much as 35 percent, most overseas profits remain offshore.


          So why the USA do this?  I realize it totally rankles a progressive that a big corporation doesn't have to pay taxes.  But OTOH how could it not benefit the US economy to have a huge infusion of cash?  Especially cash that is not being charged to our children and grandchildren suchas the  recent Repub/Obama tax cut for the very wealthy was?

          •  before you benefit from something (0+ / 0-)

            you have to have access to it.

            WHERE is this huge infusion of cash? Where is it now, and where did it go? Who benefited, exactly?

            Specific to the questions are the answers we seek, not more word-salad talking points.

            •  The huge infusion of cash is not (0+ / 0-)

              happening because of US tax policy.

              Of course, w/o changing things dramatically, there's really no way to absolutely know if that is a good or bad thing.

              But again - just because a completely dysfunctional industry (pharmaceuticals) fucked up with money they repatriated - I'm just saying it's painting with an awfully broad brush to translate that into anything broader.

              For example, General Motors is very successful in China & Brazil - what harm could come if they could repatriate some of those profits (even tax-free) to build the next generation battery factories in Michigan?

              Sure, the devils are in the details - maybe GM wouldn't do that with the repatriated funds - but slamming the entire concept based on less 10% of the whole is absolutely insane.

          •  maybe (0+ / 0-)

            in your little mind...

            But it totally changes the interpretation of the facts presented in the diary

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site