Large Corporations Game the Tax System to Avoid Paying Taxes

For U.S. Companies, Money ‘Offshore’ Means Manhattan

By DAVID KOCIENIEWSKI The New York Times May 21, 2013

Apple is one of about 20 major corporations that have been pushing for a fresh tax break, known as a “repatriation holiday,” which would allow them to bring the money to the United States at a drastically reduced rate. John T. Chambers, chief executive of Cisco, has led a sustained lobbying effort for such a policy, promising that it would act as a stimulus to encourage investment and increase jobs in the United States.

A similar policy was enacted in 2004, which prompted American companies to return more than $300 billion in foreign earnings at the reduced rate of 5.25 percent. But it led to no discernible increase in American investment or hiring. On the contrary, some of the companies that brought back the most money laid off thousands of workers, and a study by the National Bureau of Economic Research later concluded that 92 cents on every dollar was used for dividends, stock buybacks or executive bonuses. A study by the Congressional Joint Committee on Taxation estimated that a similar program would result in $79 billion in forgone tax revenue over a decade. …

“The offshore companies are a fiction and the statement that the money is offshore is a fiction,” said Edward D. Kleinbard, former staff director for the Congressional Joint Committee on Taxation. “What they are asking for is a reward for having gamed the system.”

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.