U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes

[Sancho]

http://www.bloomberg.com/news/articles/2015-03-04/u-s-companies-are-stashing-2-1-trillion-overseas-to-avoid-taxes

Eight of the biggest U.S. technology companies added a combined $69 billion to their stockpiled offshore profits over the past year, even as some corporations in other industries felt pressure to bring cash back home. ---snip---

It’s a measure of accumulated profits, including those reinvested in active businesses and factories. The companies say they won’t repatriate these profits, and they haven’t assumed that they will pay future U.S. taxes that would be owed if they did.
“One of the reasons that they’re holding the hoards of cash abroad is they don’t want to pay the repatriation tax when they bring it back,” said Rosanne Altshuler, a Rutgers University economist who studies international taxation.

------------------------

This is the biggest reason the US has an economic problem. Unfortunately, it's not on the radar for most people because we are spending time on emails...pretty crazy to me.

[CJCRANE]

1. There is enough money and resources to go round

to give everyone the basics and still let the elites have their luxuries and trinkets.

[Sancho]

2. I've been paying taxes for over 40 years...

and I've purchased products or services from most of the corporations on this list. Simply put, these companies should be held accountable to pay taxes. Otherwise, not do business in the US, or their patents aren't valid in the US, or they can't lobby in the US..

No pay, no play.

[hack89]

4. They pay US taxes on profits made in America. Nt

[Sancho]

6. Sort of...

if you read the article, you can see that companies are moving patents, etc. overseas to avoid taxes.

It all boils down to fairness. Most of these companies benefit from US infrastructure, have headquarters or major facilities in the US, and have large numbers of US citizens as stockholders.

In that case, there needs to be a bottom line of taxes paid (IMHO) no matter what loopholes they come up with...call it a minimum overseas tax or whatever.

[CJCRANE]

8. I've seen similar complaints in the British and European press

so it seems clear that corporations in general are stashing their gains out of reach of the taxman.

[scoutiu]

10. You realize, if the law is changed...

...these companies you speak of will simply raise the retail prices on the products you purchase and pass the cost on to you.

[Sancho]

11. That's such a naive and simple response...

maybe if you stick around DU (assuming you are really a Democrat), you will learn enough history and economics to understand that old memes won't hold up to examination.

Sorry, but I don't consider your comment useful unless you have substance related to the original article.

[scoutiu]

12. I appreciate your response, but why...

...if a corporation's effective tax rate increases due to a U.S. statutory change, would that corporation not increase its retail price on product X to maintain its current profit margin?

Do you believe if the price of raw materials required to produce product X were to increase that the corporation would not increase the retail price to reflect such increase?

To a corporation, taxes are an expense, the same as any other, be it raw material, electricity, payroll, or whatever. The end-user will suffer the increase without regard to the character of the expense.

[jtuck004]

13. Do you come from a different planet here there is no cost to doing business in democracy?

Where they just leave the costs on the table, to be born by those who are not profiting?

Who then pays for the education of the people who make the product, when the thieving company leaves the cost with you? Because on this planet the cost has to be paid, and will come out of your pocket whether the company pays it or not. The roads, the police, the fire, the...well, you get the idea.

Don't pretend those costs don't exist. They have to be paid whether the company pays them or not. And if they don't, it comes out of your labor.

The people who suffer are those who are the victims of the thieving bastards at the corporations and their lap dog excuse generators.

[scoutiu]

15. Totally agree...

I definitely agree those costs must be borne as part of a civilized society.

Nonetheless, with regard to corporations, those costs will be borne by the consumer regardless of how the tax code is written. Corporations, be they good or evil, will build their tax expenses into their business models to maintain whatever profit margin the market will allow...and we will continue to support that profit margin as we, as consumers, see fit.

[jtuck004]

16. "...we will continue to support that profit margin as we, as consumers, see fit." < Almost

While this is sorta how the world might work in a different place, the 85 richest people in the world are increasing their collective assets by, roughly, $500,000 a minute, here. More here.

Thus, consumers no longer make the choice, but the choices are made by those with the assets, and you choose from those. That is the reason someone who makes under $40,000 a year in the U.S. pays, on average, about another $3000 in fees and costs not paid by those who make more money. People who make more can absorb it better without it affecting the quality of their lives as much. Taxes are what equalize that hit.

It's vital that these thieves pay their fair share, because those with little assets, the most vulnerable among us, are left holding the bag otherwise.

[SoLeftIAmRight]

18. Wrong Wrong Wrong

Pre Raygun tax codes promoted a completely different economic model.

Any smart person should be aware of these changes.

Your thinly veiled blind support and trust in current corporate models and capitalism in general show that you have not thought through this topic well.

[scoutiu]

20. 100 years ago or today...

...like it or not, the duty of corporate leadership is to maximize shareholder wealth. Such is achieved by maximizing revenues and minimizing expenses. Tax, be it local, state, or federal, is an expense to a corporation just like the light bill or the water bill. Corporations don't discriminate in minimizing expenses.

If Corporation can buy a widget necessary to make its product from Company A for $1, or the same widget from Company B for $2, it will choose Company A. Likewise, if Corporation can pay tax on operations in Ireland of $1, or on the same operations in the US of $2, it will choose Ireland.

This isn't new. President Kennedy called for an end to absolute offshore deferral in 1961 but the democrat-controlled congress disagreed. They compromised by enacting the existing "subpart F" rules in the Internal Revenue Code which have allowed, for decades, the deferral of certain offshore income, which is what is at issue in this thread.

Also, it really isn't a "loophole" if it is written by Congress into the United States Code, it is the law.

[SoLeftIAmRight]

21. your words "those costs will be borne by the consumer regardless of how the tax code is written"

Wrong Wrong Wrong

[scoutiu]

23. Why is it wrong?

Example:

I have to pay $1 to buy ingredient X to make product A.
I pay $0 in taxes with regard to the production and sale of product A.
I have to make $1 for every product A I sell to keep operations going, pay my employees, and make a profit.
I sell product A for $2.
I net $1 to keep operations going, pay my employees, and make a profit.

or...

I have to pay $0 to buy ingredient X to make product A.
I pay $1 in taxes with regard to the production and sale of product A.
I have to make $1 for every product A I sell to keep operations going, pay my employees, and make a profit.
I sell product A for $2.
I net $1 to keep operations going, pay my employees, and make a profit.

In either scenario, if I have to pay both $1 in tax and $1 for ingredient A, I go out of business.

I am not arguing which is right or wrong, I am arguing that it is a (albeit market-variable) zero sum game from a corporate mindset. An expense is an expense and corporations will build it in to their profit models as required to maximize same. If taxes go up, prices go up...assuming a company will stay in business, there can't be an alternative argument.

[SoLeftIAmRight]

24. It is clear that you do not know the history of the tax code changes since raygun

Take a look - I am not your teacher. When you get a grasp of the effects of those changes then we will talk.

[scoutiu]

25. Can you please point me to those statutory changes?

I am not sure what changes you are talking about...perhaps individual income tax changes that were made when the code was amended in 1986?

However, the topic of this thread is in reference to international tax deferral issues passed by congress in 1962 that have stood, for the most part unchanged, since 1962.

You can find those rules at 26 USC 951 et. seq. if you want to read them.

Those rules are the law. I invite you to point me to a different citation to contradict that.

[SoLeftIAmRight]

26. For a simple read for a simple mind try

Thom Hartmann

[scoutiu]

27. Alrighty...although I've never heard of him, he sounds like an interesting sample:

His corporation generated over a quarter of a billion dollars, was lauded by Wall Street, then he sold it and moved to Germany (where I am guessing he didn't/doesn't pay US income tax).

See (it's from Wikipedia so take it for what it's worth, but I wanted to value your suggestion of researching him):

"Hartmann founded International Wholesale Travel and its retail subsidiary Sprayberry Travel in Atlanta in 1983, a business which in the intervening years has generated over a quarter of a billion dollars in revenue. According to their website, Sprayberry Travel was lauded by the Wall Street Journal in 1984 for being one of the early adopters of frequent travel programs analogous to the recently initiated frequent flyer programs of the airline industry. He sold his share in the business in 1986 and retired with his family to Germany."

Sounds like a prudent taxpayer.

[Sancho]

14. You do understand this is not the amount of profit...it's hiding profit...

First, any examination of history demonstrates that tax rates do not have the effect you suggest - it's not true.

Second, the "profits" are mostly the dividends of investors that are being protected, not directly related to competition, pricing, marketing, and demand. In fact, demand, marketing, and competition are the cause of pricing - not profit margins.

Third, this is a matter of loopholes that are unfair to some businesses, but penalizes others (it's not a tax rate at issue).

Forth, this is an issue of fairness to US taxpayers who subsidize companies with our infrastructure, education system, patent protection, military, etc. Some of these corporations benefit without paying fairly. US only companies obviously pay; why let some international loopholes help companies avoid taxes.

The end-user will never suffer. If these companies paid taxes fairly, then we would have more investment in America, lower taxes for all Americans (perhaps), a more balanced budget in Washington, and absolutely no impact on a billionaires who has 10 homes instead of 11 homes! I suppose that if they had a tax crunch (not anyone on the list in the article!), then the new headquarters for Google might have a one less employee cafe.

[closeupready]

17. Unless they don't. Or simply can't. If they consider market share important.

[ND-Dem]

19. you checked in here just to promote that simplistic bs?

[hack89]

3. If they make the money overseas and pay taxes on it overseas

and reinvest it overseas then I have no problem with it. If they plan to spend it in America then they should pay taxes on it.

[CJCRANE]

5. But they generally don't pay much tax overseas either.

They just stash it in tax havens.

[Calista241]

22. Depends on where they make that money.

Income earned on goods sold in Germany are subject to German taxes. The money is then moved to one of these safe havens so they can avoid additional taxes by repatriating the funds to the US or wherever they want to send the money.

Companies can only sell products to a population that can afford to buy them.

[RiverLover]

7. But if we -dare- object, we're "angry" and just want to "soak the rich"!

Trickle down will take care of it, right?

[Fred Sanders]

9. E-mail. Ebola. Dresses. Snowstorms. Bengazhi. Etc. It is all about avoiding mention of the Tea Party.