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Friday, April 6, 2012

Guess who’s pushing for tax holiday?

Congress has done a splendid job of destroying U.S. domestic manufacturing, once the life blood of a prospering American middle class. How? By legislating the highest corporate tax rate on the planet and passing laws that tax domestic earnings at much higher tax rates than if American corporations earned profits on foreign soil (basically tax free). The result? Over a trillion dollars in U.S. corporate profits is parked in foreign banks and cannot be repatriated back to the U.S. as capital without dire tax consequences.
Overseas cash and earnings stockpiles for 12 of the United States’ biggest businesses — from Microsoft to Merck — grew by about 20 percent in 2011, as most of them lobbied hard in Washington for a “tax holiday” to bring that money home at a steep discount....The companies have avoided U.S. taxes on almost every penny of their international profits by keeping the money offshore. And nearly that entire haul has been designated by top executives of those firms as “permanently” or “indefinitely” reinvested abroad, partly because of the 35 percent U.S. tax rate companies must pay to bring home foreign money....U.S. multinationals have hired an army of lobbyists to sell the idea of a tax holiday to Congress, so they might repatriate a pot of overseas profits estimated at more than $1 trillion for as low as a 5.25 percent rate. The companies — along with the U.S. Chamber of Commerce — argue that repatriation would serve as an instant stimulus of sorts, allowing hundreds of billions of dollars to flow in to the economy.
Read the rest here

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