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US Companies Parking Profits Offshore Indefinitely

ONW

ONW

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http://money.cnn.com/2014/08/27/news/economy/offshore-cash-taxes/index.html?hpt=hp_t2

"Plenty of companies that do business abroad delay paying big bucks to Uncle Sam by leaving foreign profits abroad, indefinitely. As long as they don't bring that money back home and reinvest it in the business, they don't have to pay U.S. tax on it."

Apple (AAPL, Tech30): $111.3 billion

General Electric (GE): $110 billion

Microsoft (MSFT, Tech30): $92.9 billion

Pfizer (PFE): $69 billion

Merck (MKGAF): $57.1 billion

IBM (IBM, Tech30): $52.3 billion

Johnson & Johnson (JNJ): $50.9 billion




7 companies, over half a trillion dollars in profits. A troubling trend.
 
ONW said:
A troubling trend.
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And it goes along with this trend:
http://www.washingtonpost.com/blogs...move-to-canada-for-breakfast-and-lower-taxes/
Burger King would hardly be the first large American corporation to move its headquarters—more than 70 U.S. companies have reincorporated overseas since the early 1980s. The practice has been especially popular lately—more than half of those inversions have come since 2003, or almost double the amount that did in the twenty years prior, according to data from Congressional Research Service (CRS).
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Our tax system provides incentives for companies to never bring this capital back. We would be better to set up a more favorable taxation system for repatriating this money that would penalize it less.
 
ChrisL68 said:
Our tax system provides incentives for companies to never bring this capital back. We would be better to set up a more favorable taxation system for repatriating this money that would penalize it less.
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Yup, a smaller percentage of something is > nothing.
 
ChrisL68 said:
Our tax system provides incentives for companies to never bring this capital back. We would be better to set up a more favorable taxation system for repatriating this money that would penalize it less.
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Yeah, corporations really need much deeper and more tax breaks. It's just so hard to do business these days if you're a multi-billion dollar multinational conglomerate.
 
Yeah. Everybody wants to criticize these companies for employing these tactics but nobody ever bothers asking why doing an inversion is so popular. It's probably because the US Corporate rate is the highest in the world.

I'd argue that these corporations would be breaching their fiduciary duties to shareholders if they didn't do these rules of transactions in order to maximize profit.
 
06deacon said:
Ahh, APB 23.
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Which again shows a misconception that these reporters make applying financial reporting standards and confusing them with tax law.

The limitation about permanently reinvesting the profits is a financial reporting standard about whether you are going to have to record the impact of the taxes in your financial statements. You could be required to do that even if you never actually pay taxes on those unrepatriated profits.
 
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94Deac said:
Yeah, corporations really need much deeper and more tax breaks. It's just so hard to do business these days if you're a multi-billion dollar multinational conglomerate.
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Well, it is apparently easier to do it in that tax haven Canada.
 
94Deac said:
Yeah, corporations really need much deeper and more tax breaks. It's just so hard to do business these days if you're a multi-billion dollar multinational conglomerate.
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It's not about what they need. A corporation will damn near always act in its best interest. It's about what we need to do as a nation to prevent these companies from choosing to park their profits, or their headquarters, in other countries.
 
DeaconCav06 said:
Yeah. Everybody wants to criticize these companies for employing these tactics but nobody ever bothers asking why doing an inversion is so popular. It's probably because the US Corporate rate is the highest in the world.

I'd argue that these corporations would be breaching their fiduciary duties to shareholders if they didn't do these rules of transactions in order to maximize profit.
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Everyone knows why they're doing it, but they are benefitting from participation in the US consumer market, financial exchanges, infrastructure, military, etc. And our corporate tax rate is not the highest in the world.

http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/

"GAO: U.S. corporations pay average effective tax rate of 12.6%"
 
DeaconCav06 said:
Yeah. Everybody wants to criticize these companies for employing these tactics but nobody ever bothers asking why doing an inversion is so popular. It's probably because the US Corporate rate is the highest in the world.

I'd argue that these corporations would be breaching their fiduciary duties to shareholders if they didn't do these rules of transactions in order to maximize profit.
Click to expand...

Countries with less overhead will always have lower corporate taxes. Just like 3rd world countries will always have cheaper labor.

The USA can't just slum it. We can't win that battle.

We've got to start with the basics. What's the benefit of being an American company? Answer that question and enhance the answer. I doubt other countries will be able to compete with it.
 
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ONW said:
Everyone knows why they're doing it, but they are benefitting from participation in the US consumer market, financial exchanges, infrastructure, military, etc. And our corporate tax rate is not the highest in the world.

http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/

"GAO: U.S. corporations pay average effective tax rate of 12.6%"
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Big difference between tax rate and effective tax rate. One of the reasons the effective rate was lower was because they were employing these strategies.
 
PhDeac said:
Countries with less overhead will always have lower corporate taxes. Just like 3rd world countries will always have cheaper labor.

The USA can't just slum it. We can't win that battle.

We've got to start with the basics. What's the benefit of being an American company? Answer that question and enhance the answer. I doubt other countries will be able to compete with it.
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Canada probably can
 
DeaconCav06 said:
Yeah. Everybody wants to criticize these companies for employing these tactics but nobody ever bothers asking why doing an inversion is so popular. It's probably because the US Corporate rate is the highest in the world.

I'd argue that these corporations would be breaching their fiduciary duties to shareholders if they didn't do these rules of transactions in order to maximize profit.
Click to expand...

Kind of misleading. We have the highest top nominal tax rate at 35%, but the last available data shows that the average corporate tax rate in 2011 dipped to 12.1%, its lowest level since before World War I.
 
TownieDeac said:
Kind of misleading. We have the highest top nominal tax rate at 35%, but the last available data shows that the average corporate tax rate in 2011 dipped to 12.1%, its lowest level since before World War I.
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Which is aided by the fact that billions of dollars are sitting overseas.
 
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