Tech Firms Keep Piles of 'Foreign Cash' In US 427
theodp writes "There's a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas,' reports the WSJ's Kate Linebaugh (reg. or the old Google trick). 'A lot of it is actually sitting right here at home.' And if tech companies like Google and Microsoft want to keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, Linebaugh explains, this money is still overseas in the eyes of the IRS and isn't taxed as long as it doesn't flow back to the U.S. parent company. Helping corporations avoid the need to tap their foreign-held cash are low interest rates at home, which have allowed U.S. companies to borrow cheaply. Oracle, for instance, raised $5 billion last year, paying an interest rate roughly two-thirds of a percentage point above the low post-crash Treasury yield, about 2.5% at the time (by contrast, grad students and parents pay 6.8%-7.9% for Federal student loans). Were the funds it manages to keep in the hands of its foreign subsidiaries brought home and subjected to U.S. income tax, Oracle estimated it could owe Uncle Sam about $6.3 billion."
time for a outsouring tax? (Score:5, Insightful)
time for a outsouring tax?
Be for long we will need a way to pay for all people in the USA not working.
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time for a outsouring tax?
Should Uncle Sam tax all the income of every worldwide transaction of every corporations with any presence in the US?
Unless he does that, if he wants to charge Oracle an outsourcing tax, then Oracle simply becomes a, e.g. Cayman Islands corporation and outsources some of its work back to the US.
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No. But if companies include and locally declare the foreign profits/revenue as part of their profits or revenue (or as collateral when borrowing from banks etc) then they should be taxed on it, but minus whatever tax they have already paid in the foreign country on it. If they have already paid a lot then it's zero if they paid zero then it's the full amount.
If it isn't your profit and it isn't your money you shouldn't have to pay tax on it. But if you claim that it's your money, why shouldn't you be taxed
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Tax money leaving the US for any reason.
Re:time for a outsouring tax? (Score:5, Informative)
No.
We have TANF(Temporary Assistance for Need Families) and unemployment insurance.
Both are temporary and the first is only for families. The latter is also not available in most states if you quit, are fired for cause, or were not working for more than some amount of time, normally a year.
Re:time for a outsouring tax? (Score:5, Funny)
Banned from 4chan again?
Sucks to be you.
Two things are true (Score:4, Insightful)
1) Policies that allow children to starve in the streets of one of the wealthiest nations of the world are uncompassionate and unconscionable.
2) Policies that have a net effect of subsidizing the production of babies within the poor class are unscalable and unmaintainable in the long run.
Both of these facts are true, and the most natural responses to them directly contradict one another. You cannot address the pain recognized by one fact without causing the pain of the other.
People tend to harp on one or the other, and each camp has a perfectly justifiable criticism of the other camp. Proponents of both camps will feel completely justified by sound logic, and they are both right.
Any possible middle ground will involve some kind of egregious injustice. There is no way to resolve this situation without leaving someone very justifiably pissed off. You can let the poor starve (watch them turn to crime and feel justified by it), you can give them all the free money they need (watch the earners scream about having what they have earned taken from them to feed parasites, justifiably, and watch the population among the poor explode to unmaintainable levels), you can impose limitations on reproductive rights (watch EVERYONE scream about this and enforcement will be a nightmare), you can claim the babies as wards of the state (hah...yeah that will fly). Maybe you have some other ideas? Post them, so the fact that they will not work can be exposed.
We also have crazy checks (Score:4, Insightful)
Not really. We have a dog's breakfast of programs that provide food subsidies, housing subsidies, subsidies for mothers with children they can't support, free cell phones, unemployment benefits, medical subsides, and disability subsidies.
The system is so crazy that we have parents actually encouraging their kids to BE crazy [townhall.com] so they can receive more money.
But by gaming the system a person can do pretty well. A single mother with two kids making $29,000/year receives net income and benefits of over $57,000. Earning more income actually results in a net decrease in total income+benefits -- this is the "welfare cliff [aei-ideas.org]".
Re:We also have crazy checks (Score:4, Insightful)
But by gaming the system a person can do pretty well. A single mother with two kids making $29,000/year receives net income and benefits of over $57,000. Earning more income actually results in a net decrease in total income+benefits -- this is the "welfare cliff [aei-ideas.org]".
Make no mistake, this is by design. The politicians who designed it and refuse to change it benefit, because the recipients overwhelmingly tend to vote for those who promise more of the same (that's the carrot). When a family comes to depend on these benefits and wouldn't be able to make ends meet without them, they fear the possibility that they might be taken away (that's the stick).
With dependency comes power. You can be absolutely certain of one thing: politicians understand this. They have every incentive to keep people in the system.
I really wish the "mechanics" of power were universally taught in the public schools, along with propaganda techniques, particularly the myriad ways you can mislead someone by carefully crafting your message, all without ever making a single false statement. Framing, cherry-picking your facts, characterization, emotional appeals, bandwagon appeals, just to name a few, should be universally taught and understood. Of course, this is unrealistic. The government funds and operates those schools, and there is no way the government is going to sponsor that. It would be like asking Microsoft to recommend OSX.
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There you go again, EXPLAINING Romney's 48% remark. [msnbc.com]
Stop that. Being honest isn't fair.
Re:We also have crazy checks (Score:4, Informative)
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The bit you left out of your cherry-picked view is that the reason these programs are necessary is that the jobs that are available aren't able to support the people.
So the companies get to pay minimum wages with little or no benefits because they know the employees won't drop dead because the government covers their needs.
The part you seem to leave out is, that it is because of these social safety nets that non-living wages are able to be offered and are accepted. If people could not actually live on these wages, the market would be forced to adjust and increase wages as necessary. If the market did not adjust, the Government would have to step in and force them to via the Minimum Wage. The minimum wage is the proper mechanism for ensuring a living wage of the populace. However, it does not grant politicians any power over t
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The real question is:
How did people get along before these programs started? Looks like the food stamp program started in the 60's from the quick glance at the wikipedia article I looked at.
I know I complain about entitlements (with good reason, sometimes) But we only spent $74 billion last year on food stamps. That's not really that much money in the long run. The US national deficit was $1.1 Trillion. So even without that program the US govt still spend over a trillion dollars more than they earned.
W
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Re:We also have crazy checks (Score:5, Insightful)
How did people get along before these programs started?
Old people were found dead from malnutrition and starvation, and children grew up with development issues from poor nutrition (costing us more money later when their problems became social).
Why is there such a need for these programs now, but not before. America has always had poor people. Did they really just starve in the streets of the larger cities or even the small ones?
Yes.
What has changed since then?
With cameras, the problems started getting personalized. If you note, the issues have started getting addressed about the time photos were being carried in newspapers, and got more traction when news was in movie theaters. And really took off with TV news.
The problem was ignorable until the piles of dead bodies made it in front of you. Then you'd demand something be done. When you are told about it, but don't see it, it's easy to ignore it. Publicity has changed (And no, I don't mean to imply any hidden media agenda happened or was necessary, just availability of impartial information was sufficient).
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The bit you left out of your cherry-picked view is that the reason these programs are necessary is that the jobs that are available aren't able to support the people.
That's cute, I mentioned cherry-picking so you will show your superiority by using my term against me. With this you self-identify as one of the lemmings.
Now then, my comment was about how and why those programs are run and who benefits the most by keeping them the way they are. How you would construe that as an argument against the existence of such programs is mind-boggling, but I suppose you'd have less to rail against if you didn't.
Re:We also have crazy checks (Score:5, Insightful)
If you can't afford kids...maybe you shouldn't have kids?
And naturally if economic conditions change such that you can no longer afford the kids you had during better days you should sell them to the glue factory.
Re:time for a outsouring tax? (Score:5, Insightful)
Yes, but at some point, you run out of enough people working to pay for those that are not.
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Seriously, you don't from whence I came. I'm not rich now, I certainly didn't grow up rich (although I knew lots of people that were growing up, and I knew I wanted to make good money when I could).
Regardless of my upbringing, and my current situation in life, what I said was true.
At some point, you run out of people working and being taxed to pay the ones who aren't working.
Hell, look at our Social Security system to see that problem in full action. We have fewer
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I would gladly settle for collecting the revenue in the same fiscal year + 1 quarter.
Fat chance.
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Taxing things we should be promoting, is counter productive, as it moves people from the things we ought to be promoting, to things that we should be avoiding. Taxing Income looks good on paper, but leads to income avoidance, or worse, reporting avoidance (grey and black markets).
You want to raise ALL the money you need? Tax "sin" (lack of better term): alcohol, cigarettes, prositution, porn etc. Hell, don't make guns illegal, just tax them and their projectiles.
All taxes are regressive, because the "rich"
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"Sin" is already taxed at the state and local level. There is perhaps some untaxed "sin" out there, or perhaps our definition of "sin" is a little too new age-spiritualism and needs to be more hard core roman catholic, and should include ALL forms of hedonism (video games, movies, magazines, any any other form of entertainment).
I'm not advocating a restructuring of taxes as we know it. Just removing a tax that, as you say, is counter productive. Taxes are always regressive, and that's why we tax the wealthy
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We shouldn't BE using taxation as a method to manipulate behavior!!
Why not just tax for the basic purpose of funding government in its constitutionally (in the US) mandated functions. Simple taxes, no loopholes, no deductions for
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Bullshit. Here is the section of the 2008 Democratic Party Platform relevant to Obamacare (source: NYT [nytimes.com]):
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That sounds like it makes sense, but it's not true. It'd only be true when there is perfect or near-perfect competition (i.e., nowhere); in that case, any increase in cost of goods sold is passed on to the buyer. However, in the real world, there is not perfect competiti
Unintended Consequences (Score:4, Funny)
Raise taxes and those taxed will find legals ways to avoid them. Ways that the morons in Congress never anticipated.
To paraphrase Princess Leia, "The more you tighten your grip, Harry, the more tax dollars will slip through your fingers."
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So then we should have no taxes at all?
If you want to benefit from our civilization you should expect to have to pay for it as well.
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And of course you completely made up what you believe to be the point of my post.
That's OK, it's /. and that's what happens. I'm good with it.
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I must have misinterpreted. Please feel free to clarify.
It looks like you are saying any taxes or tax increase will be avoided so we might as well have no taxes.
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I am saying that the tax law is created by Congress. It is huge, complicated and is a back door attempt to implement social policies.
NO ONE likes paying taxes and EVERYONE tries to find a way to pay less.
Every time someone finds a way around a tax, Congress tries to plug the hole and invariable opens a new one. The more complicated they make to try to maximize receipts and at the same time try to implement social policies, the more fragile it becomes.
Taxes will be avoided because Congress inadvertently enab
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I agree that simplifying the tax goal is a good goal. I disagree that it should not be used for social policies, taxing cigarettes I think is a great example of just that.
I do not mind paying taxes, I do not try to find anyways beyond filling out the forms. I have never contributed more to a 401k or charity or something just to avoid taxes. I just paid my county taxes at the bank on saturday with a smile on my face. The same smile I have when I am voting or am selected for jury duty. I have this thing calle
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How cute.
It puts me in the camp of those have personal responsibility and at odds with crooks. I am often at odds with crooks and cheats.
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I never said that at all.
I said it should be repealed. Meaning I would like to get that rule changed via legal processes.
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So then we should have no taxes at all?
If you want to benefit from our civilization you should expect to have to pay for it as well.
You avoid all these problems by taxing consumption instead of income. Not to mention, rich people consume quite a bit more than poor people so this nebulously-defined "fair share" would be achieved. The Fair Tax Act would take care of all of this neatly without burdening the poor, since those at or below the poverty level would pay no net taxes.
Of course, like any proposal that would drastically reduce the government's control over us, the Fair Tax Act gets demagogued left and right by two major groups
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The Fair Tax Act would take care of all of this neatly without burdening the poor, since those at or below the poverty level would pay no net taxes.
And all you have to do is get the Federal Government involved in every intrastate commerce transaction, impose sales taxes in States that have none, and put every American on the dole ("prebates" are the best way to breed an entitlement mentality).
It may be a mathematical solution, but it's antithetical to the American system.
(not that the income tax system has
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It may be a mathematical solution, but it's antithetical to the American system.
Can you tell me how that would be worse than the current income tax system, with all the information the government must collect to implement it, and all the carrot-and-stick methods it enables? That's the part I am missing. "It's un-American" is rather nebulous.
If you think the federal government involved in commerce is bad, consider how much the IRS knows about your personal life. How much I spent making a transaction at a department store is small fry, especially when you consider that my name need
Re:Unintended Consequences (Score:4, Informative)
As soon as you eliminate the government, my friends and I will be over with our guns to take everything you own.
Re:Unintended Consequences (Score:5, Insightful)
The fair tax act is merely a way to ensure the rich don't have to pay taxes.
Forget the poor, someone making $30k a year with a family of four should not be paying the same rate as a billionaire. Hell, under the fair tax act he would pay a higher percentage income as tax.
Rich folks consume a far lower share of their income every year. If you make $30k or hell $100k a year and have a family of four you are consuming all or near all of that. Thus paying tax on all of it, as compared to a rich person who may only spend a very small percentage of his income.
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Except under Fair Tax the guy making $30k a year pays no taxes...
Why does everyone stop reading at the words "consumption tax" and ignore the actual facts related to the proposal? The system includes prebates to cover the taxes incurred on necessities. Thus you spend your $30k but also get a check in the mail to cover the taxes you are paying when spending your $30k.
Not really true. (Score:5, Insightful)
Rich people consume much less than poor people. They wouldn't be rich if they spent their money. Most money is invested to make more money.
Re:Not really true. (Score:4, Insightful)
Poor people typically consume more of their money because their income and their "minimum spending necessary to survive" are closer together. If someone makes $21,000 per year and requires $20,000 for necessities (food, rent, medical, etc.) then they're only saving $1,000 a year. Not enough to become rich at any point.
If someone earns $1,000,000 a year and only requires $100,000 to live on (necessities plus a few luxuries), they can easily save 90% of their income every year.
If you taxed both at 10%, the poor person would need to pay $2,100 in taxes (resulting in not having enough money for necessities) and the rich person would pay $100,000 (thus reducing their yearly savings to a "mere" 80% of their salary).
This doesn't even get into the situations where a CEO is given a "salary" of $1 and generous stock options and non-monetary perks (thus living a life of luxury despite having a very low "income"). Any simple flat tax is going to either a) have to address these cases and will quickly turn into a monstrosity again, or b) not address these cases and wind up being unfair.
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Are you really that stupid? Who do you think buys luxury cars & homes? The poor?
Um.
... and that's not even taking into account the myriad of luxury items that
How many dollars worth of luxury cars and mansions are sold in this country each year?
Now take that figure and compare it to the dollars worth of regular cars and homes sold in this country each year.
It doesn't take a fucking Oxford fellow to understand that the wealthy actually spend less money on goods than the rest of us, and thus, would have a lower tax burden than the average American under the UnFair Tax proposal.
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You avoid all these problems by taxing consumption instead of income. [...]
Poor people consume about 100% of their income. Rich people significantly less. If you're really rich, you will have trouble consuming even a single percent of your income, let alone a significant portion thereof.
Second, define "consume". That private jet you're flying around with costs $30 million to buy. But did you buy it, or did company X in the Bahamas buy it? Or did they maybe rent it from an owner in Lichtenstein or Luxemburg? Maybe it doesn't exist in a taxable sense at all. OK ... but that Coca Col
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So then we should have no taxes at all?
Of course we should have taxes. But some taxes have much more negative effects than others. Income taxes are worse than sales or property taxes, because they inhibit productivity and job creation, instead of inhibiting consumption and wealth accumulation. Corporate income taxes are the worst, because they push jobs overseas, divert resources toward accountants and lawyers, and collect very little revenue. It would be far better to eliminate them, and tax the individual shareholders instead.
If you want to benefit from our civilization you should expect to have to pay for it as well.
Sure. But co
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So then we should have no taxes at all?.
There's no need to be so hysterically extreme. The solution should be obvious: the cost of paying the tax should be as close as possible to the cost of avoiding the tax. Then it's easier to just pay the tax.
Besides, these are corporate taxes we're talking about, which are a horribly regressive burden on low income people.
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Basically, your point is that without "taxes" we wouldn't have a "civilization", or worse, that civilization is defined by the taxes it pays, the more taxes equals the more "civilized" a society is.
We can be civil and civilized without being forced into paying taxes under threat of guns at the hands of our government.
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So feel free to move.
There are states that have no urban centers, even countries if that is what you wish.
You will probably have to give up any life other than dirt farmer though, since pretty much anything above that level was invented, manufactured or designed in one of those urban centers.
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I live in a suburban area of a moderate and sane urban center. I pay county taxes and various state taxes such as sales, etc.
We have a vibrant business and cultural environment and moderate taxes. I'll stay where I'm at. YOU can move to New York if you want though.
Re:Unintended Consequences (Score:4, Insightful)
You are still paying for and participating in the civilization of the major urban centers.
I have no desire to move to New York city, I do like visiting it though. I have no problem with some of my tax dollars ending up there. As it turns out New York city and the entire state actually lose money on federal taxes in that they pay more than are returned to them. This is very common of the blue states being the providers and the red states being welfare queens.
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Sorry Skippy, we have plenty of rich people here in Texas.
You see, not everyone's life revolves around New York City. A hurricane could hit New York and it wouldn't, well, didn't affect us economically at all.
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Had to be a Texan, you people make me laugh every time I visit.
Where do you think the loans for all those oil wells come from? Shit, who do you think own half of them? Who do you think pays for all those nice hunting ranches? Who do you think is hunting there? I have a lease in your state, you should thank me for shooting some of your pigs.
That hurricane impacted Texas, you might not have noticed, but that is because you are not a stockholder or even smart enough to understand our our civilization is tied t
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You have no idea what you are talking about regarding crime. Its MUCH worse in DFW. In fact you guys seem to be really big on rape. WTF?
25% more murders, almost 400% the rapes, 4x the burglaries, almost triple the thefts. You guys are a bunch of criminals.
http://www.usa.com/fort-worth-tx-crime-and-crime-rate.htm [usa.com]
http://www.usa.com/new-york-ny-crime-and-crime-rate.htm [usa.com]
Taxes ARE lower, however employment, income and education levels are too. Nice try though!
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And you once again completely make up a Strawman so you can post your extremist tax beliefs.
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What strawman was that?
You wanted to avoid civilization, I was helping you do that.
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No, I said nothing abut avoiding civilization. You inferred that from my statement that the more Congress tried to raise taxes, the more ways people would find ways around it.
Not sure how you got from A to B, there really in no path there.
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I have no desire to benefit from the Civilization of any of the major urban centers.
So who typed that again?
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YOU jumped from my initial statement to avoiding civilization. I merely expressed a disdain for what many people consider "our civilization".
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No I stated that this is what taxes pay for. You went on some dumbass tangent about how a city you have likely never visited and know nothing about other than what Fox News told you.
You can express disdain all you like, pretty hypocritical though since you are benefitting from it.
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MSNBC is a center right new network.
Fox news is far right. We have no left leaning new media to speak of.
Fox News does in fact have show hosts that misdescribe NYC and use it and DC as some boogyman. You know that.
Re:Unintended Consequences (Score:5, Interesting)
You know, tax codes need not be written full of loopholes... You need a big helping of corruption -- sorry, lobbying -- to get the mess that the US tax code is.
Though in this case, this is not even a loophole: why would you tax differently US corporations buying US T-Bills and foreign corporations buying US T-Bills ?
The companies doing these shenanigans are not even really avoiding taxes: they are simply delaying them. If the money was to flow back to the US operation, it would be taxed. The problem is that the idiot managers think that avoiding taxes at the cost of investing less is somehow a good idea. Because some moron has decreed that having large amounts of cash is somehow a good idea for a corporation -- it's not, it is a horrble waste of resources.
And of course, it is also bad for society. But this is not really a taxation issue, it is a "people can't count and will cut their noses to spite their faces" issue. And frankly, I don't know how to solve that except by giving significantly more leverage on the board and board salaries to the shareholders.
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It's only a waste of money (remember folks, cash is not capital!) if there's nothing else to invest in that would generate a better return than the base interest rate.
Given that the tax on such investments are zero then any interest rate is going to be pure profit. For a business that's a pretty good deal, especially since this is a guaranteed profit at that. The money is not at risk and the bonds can be sold for face value if they need the liquidity at any given moment. For a business this is a great situa
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T-Bills have a negative real yield. You can't really justify the investment strategies of those big corporations. It's not that there are not better investment to be made, starting spin-offs, investing in blue-sky research. It's that managers at those corporations understand investment seemingly only in terms of financial instruments.
Repatriating earnings (Score:2)
why would you tax differently US corporations buying US T-Bills and foreign corporations buying US T-Bills ?
Because you have less/no legal authority over the foreign corporations. I should have thought that was obvious. Good luck collecting taxes for a foreign corporation that does no business in the USA.
The problem is that the idiot managers think that avoiding taxes at the cost of investing less is somehow a good idea.
It is a good idea to keep the cash parked overseas if the return on the investment is less than the cost of the taxes. Taxes on repatriated earnings effectively raise the cost of capital and reduce the number of available investment opportunities for that cash with a net present value greater than zero. If yo
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Make that illegal then. Boom.
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When will the wealthy stop leeching off the working classes?
NEVER
If you had say the golden goose would you slaughter it to get more eggs or would you patiently wait for your golden egg a day that you didn't have to work for?
Re:Don't raise taxes (Score:4, Insightful)
In a senario like that the wealthy would be safe, because they could afford a private police force. They middle class neighborhoods would be safe, because they as a whole (neighborhoods setup with stuff like HOAs) could afford a private police force. Poor neighborhoods would be more than likely ran by some sort of gang (a lot are even now).
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They are not a goal in itself. I repeat, a company is not a goal in itself.
How then do you explain someone like Bill Gates, who for some strange reason continued to work for a long time after having acquired enough wealth to secure the financial future of his great-great-great-great-etc grandchildren?
For some, it's a way of life. I think it's a shallow, hollow, materialistic, empty, and ultimately unsatisfying way of life that can appear glamorous for a while. But it is a way of life. Some people do live to work instead of working in order to live.
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Ask the Fed why interest rates are low-- to encourage the taking of loans and spending of money. So the Fed wants us to spend money, to stimulate a still-stagnant economy.
Which runs contrary to the idea that capitalism works by people accumulating capital (their incentive is a decent interest rate) which is then available for investment in the broader economy either through direct investment or pooled investment (e.g. banks making loans from their reserves).
The Fed seems to think that it can print its way i
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Actually, it should be "Raise taxes and those taxed will find legal ways to avoid them; ways that the morons in Congress never anticipated."
(not legals)
Not sure about the semi-colon, maybe a comma?
Perhaps a Grammar Nazi could offer some insight.
I am in no way defending Oracle for anything, but (Score:5, Insightful)
It sounds to me like they are using their foreign profits like a 401k, keeping them in accessible until they need them, and then paying tax on them when they do.
I don't have a problem with Oracle paying more taxes. The "fix" though seems to be that in charging them for any foreign assets on shore that we simply create the pressure that causes them to leave their foreign profits overseas. By letting them use these profits as collateral for loans, we get billions of extra dollars sitting on our banks allowing those banks to give out cheaper loans to the rest of us.
Whether or not Oracle deserves a tax-deferred-savings account like mine, the fix of pushing the money back overseas, seems worse than the illness.
Re:I am in no way defending Oracle for anything, b (Score:4, Insightful)
Whether or not Oracle deserves a tax-deferred-savings account like mine, the fix of pushing the money back overseas, seems worse than the illness.
Yes but this calm, rational, mature, objective point of view doesn't provide the visceral "satisfaction" of punishing people who are easily demonized and easy (often with reason) to hate. So politically, it doesn't sell very well. It doesn't appeal at a base level to the masses who vote emotionally instead of taking the time to recognize certain cause-and-effect relationships.
Politics should be about how to best manage a nation, not what it's become now, which is how to ineffectively resolve one's discontentment with life by trusting liars who don't give a damn about you.
been done for a long time (Score:2)
the interest is tax deductible making it like free money
why pay employees from your bank account when you can borrow short term, pay the low interest, deduct interest from your taxes and just roll the notes over into new notes every year or so?
retail companies do this to pay for the product you see on the shelves during the holidays
and its also good for use peons since the money goes into money market accounts and back to the regular folk. not like banks are lending their own money either
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Unless your marginal tax rate is 100%, something being tax deductable does not make it "like free money".
Cash flow and opportunity cost (Score:2)
the interest is tax deductible making it like free money
Not precisely though the tax shield can make some investments possible/attractive that might otherwise not be feasible. What makes it close to free money is the fact that interest rates are so low. The deducti
why pay employees from your bank account when you can borrow short term, pay the low interest, deduct interest from your taxes and just roll the notes over into new notes every year or so?
There are two big reasons why you might not do this. The first and most important is cash flow. It's fine to borrow like you describe but if you have an interruption in cash flow and cannot repay your obligations then you have killed the business. For a company like Oracle or General Electric this
Why compare it to student loans? (Score:5, Insightful)
Why would you compare the interest rate that Oracle can borrow money at with an average college student whose family does not have enough funds to pay for college themselves? Oracle has over $30 billion in cash reserves, so they are a much safer bet to lend $5 billion than a college student who can't scrape together $100k.
Do people honestly think banks should lend money with rates based on how sympathetic the borrower is?
Re: (Score:3)
corp tax vs capital gains (Score:5, Interesting)
I've been saying for years that we need to go back to Ronald Reagan's 1986 Tax Reform act. We could tax capital gains as regualr income, and do away with corporate tax altogether. That would eliminate the entire discussion. All sides of the debate would have to STFU since they got what they wanted. And there wouldn't be any more of this off-shoring and subsidiaries for tax purposes. It wouldn't matter how CxO's take their pay, because they will still be taxed - the same as everyone else. It wouldn't matter any more how the books get moved around. And the Occupy types wouldn't have anything more to bitch about. The only ones who would get truly shafted would be the greedy.
Holiday (Score:5, Interesting)
The main reason corporation are doing this is that they are hoping for an overseas earnings tax holiday.
Unfortunately it's not a wish upon a star. Such a holiday has been granted before, in 2004. So it is a perfectly logical strategy to hold out as long as possible in hopes of getting another cookie.
There is actual evidence that the last tax holiday led to job cuts as well.
Considering that we are in a liquidity trap now there is certainly no rational expectation that a repatriation tax holiday will benefit anyone except perhaps the stockholders of these corporations.
Such tax holidays are extremely bad policy for a variety of reasons. Which means I guess it's going to happen.
In reality what is needed is an overhaul of the tax system which includes reducing the top rate and elimination of many loopholes. Of course this is beyond the ability of our completely dysfunctional Congress. But the benefits to the economy would be massive.
Re:Holiday (Score:5, Informative)
The loopholes exist because of the economic benefits. RTFA, the USA is the only economy in the developed world to try to tax foreign earned income the same as domestically earned income. This is true for citizens and green card holders too, by the way, which places US citizens into the unique and perverse situation of moving abroad and still paying Uncle Sam taxes, despite getting no services for that tax.
For US persons, this is merely an unfair affront to basic common sense. For US companies it's the difference between being competitive or being double taxed into total lack of competitive-ness. So these "loopholes" as you call them have been around for a long time and don't get closed because they're the thing that's keeping US business on a level playing field with the rest of the world.
You're right that the US tax system should be simplified and loopholes removed. If the US gave up on trying to tax income regardless of where it was earned, it'd be the same as every other tax system and there'd be no need to maintain these "loopholes", they'd just go away naturally. Also, US companies would be more likely to spend foreign earned money in the USA because there'd be no double taxation. And US citizens would not be trapped by the financial "Berlin Wall" that is resulting in them being systematically evicted from the worlds financial institutions. It'd be a win all round, but of course, nobody in Congress is talking about doing that because it'd be revenue neutral.
Re: (Score:2)
US citizens working abroad can enjoy the comfort of an embassy and US Marines protecting them in times of war and/or crisis. Hell, they'll even evacuate you back to the US if the shit really hits the fan. I'd pay my taxes for that, especially if I was working somewhere that's dangerous.
Re: (Score:2)
Are you shitting me? The US military spends its time blowing up goat herders in Afghanistan. If you live in Germany, that is really the least helpful thing they could be doing. And if you live abroad then it's going to be the
Re:Holiday (Score:4, Informative)
which places US citizens into the unique and perverse situation of moving abroad and still paying Uncle Sam taxes, despite getting no services for that tax.
Except that you can exclude the first $90000 or so of income from taxation and generally deduct foreign income taxes from your US taxes.
Re: (Score:2)
$90,000 sounded like a lot when Congress set that amount back in the 70s, but the dollar has been steadily in decline for decades. Here is a graph relative to the Swiss Franc [to-ma.ch]. People who would have been considered incredibly rich by meeting this standard back when it was set are now merely normal people earning in a currency stronger than the dollar.
The real problem with trying to tax people who don't actually live in your country is the logistics of it. How can you do that? America's approach is to try and
Re: (Score:2)
It's not just a $90,000 exemption. There are housing exemptions, credits on foreign taxes paid as so forth. Then add in the fact that the US tax code for people with less than $45,000 or so in taxable income is pretty progressive, and if you have half a brain in your head you are contributing to an IRA it is very unlikely that you are paying significant US taxes unless your income is $170,000 and up.
A Byzantine Tax System (Score:2)
Tax (Score:3)
We need a use it or lose it tax.
conservatives scream about entitlements (Score:2, Insightful)
Who is Surprised? (Score:3)
AMT? (Score:3)
Let me get this right ... (Score:2)
We're already keeping profits from foreign subsidiaries (profits that have already been taxed in the jusrisdiction they were generated, something the US does that few if any other countries do) out of our economy. Now we're going to chase it out of our banks too?
It's stupid in the practical sense - in that they'd just park the money somewhere else. And it's stupid in the moral sense - that indignant people see no problem with and have no shame advocating as much confiscation as possible of something belon
So what... (Score:2)
[Oracle pays] about 2.5% at the time (by contrast, grad students and parents pay 6.8%-7.9% for Federal student loans).
Why bother to add this? Oracle is a very credit worthy company with large assets. In contrast, student loans have a very high default rate and are risky to lenders (or the government if they assure them).
Obviously it was added to try to create some outrage where none rightly exists.
In plain sight (Score:3)
"Stealing" imaginary property, doing copies for no profit or private use: Lawsuits for hundreds to millons of dollars, or years in prison
Actually stealing billons of dollars in taxes: no consequences
Putting world economy at stake: bailout
Clearly we got it wrong. Stealing is not the wrong thing, just doing in small to zero scale does.
Re: (Score:2)
It's not so much the scale of the theft as it is the scale of the person/company doing the theft.
Home user uploading a hit song to a P2P network = Small user = Big penalties
Phone company charging each of their customers $1.99 a month in "Federal Recovery Tax" (where no such tax exists) = Big user = At most a stern finger wagging and a fine much less than the money they raked in from the fees.
Of course, the big difference is that your average small/home user doesn't have the means to lobby Congress. The big
Re: (Score:3)
Inflation does not depend on the amount of money in the system. It depends on the amount of money people get to spend. Whether you have large sums in a foreign bank, or a US bank, doing nothing means this money can cause no inflation. In fact, the FED trebled the money supply in those last years, and the US is still in quasi-deflation...
Re: (Score:2)
Well, presented with the 2 percentages, they chose to pay 1% taxes.