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Tech Firms Keep Piles of 'Foreign Cash' In US

Unknown Lamer posted about a year and a half ago | from the hanging-out-on-rusty's-yacht dept.

The Almighty Buck 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."

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time for a outsouring tax? (4, Insightful)

Joe_Dragon (2206452) | about a year and a half ago | (#42669549)

time for a outsouring tax?

Be for long we will need a way to pay for all people in the USA not working.

Re:time for a outsouring tax? (1, Insightful)

Tim MacDonald (1062874) | about a year and a half ago | (#42669571)

Don't you already have welfare, a system to pay for all people in the USA who happen to not be working?

Re:time for a outsouring tax? (0)

Anonymous Coward | about a year and a half ago | (#42669635)

oh yea, we have that system and it works 100% of the time with 100% efficiency and 0% dissatisfaction and 0% unexpected results.

No wait, the exact opposite of what I said up there.

Re:time for a outsouring tax? (5, Informative)

h4rr4r (612664) | about a year and a half ago | (#42669675)

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? (-1, Troll)

Anonymous Coward | about a year and a half ago | (#42669835)

We have TANF(Temporary Assistance for Need Families)

more like Temporary Assistance For Negro Families.

yeah yeah lots of whites use welfare. sure thing. what matters is that the PERCENTAGE of all whites taking welfare is a LOT LOWER then the PERCENTAGE of all negroes taking welfare. thats how you fairly compare them.

same deal with crime rates and drug abuse and all the other fail-at-life indicators. american blacks are the underachievers of society.

oh those poor poor pitiful poor you idolize like some kind of heroes. most are not victims of oppression or bad luck or any of that crap. the NUMBER ONE way to be poor in america is havin babies you knew you couldn't afford. we all know how babies are made. we all know what birth control is. stop defending this stupid shit. yeah i know you like to make a big show of how compassionate you are but youre doin it wrong. you have such a big heart then think about this. it is the children born to these sluts that suffer.

maybe govt can give them free bungee cords to hold their thighs closed.

Re:time for a outsouring tax? (-1)

Anonymous Coward | about a year and a half ago | (#42669937)

Besides. If all the poor ppl got rich or at least middle class and all the blacks and whites and hispanics started getting along ... how the HELL would Democrats ever get elected? Shit man it would be a one party system.

Re:time for a outsouring tax? (5, Funny)

ColdWetDog (752185) | about a year and a half ago | (#42669947)

Banned from 4chan again?

Sucks to be you.

Re:time for a outsouring tax? (1)

operagost (62405) | about a year and a half ago | (#42669959)

I know we're used to governments just printing money when they need it, but we're talking about actually collecting the revenue before we hand it out through our entitlement programs. Quaint idea, I know.

We also have crazy checks (3, Insightful)

mc6809e (214243) | about a year and a half ago | (#42670151)

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 (4, Insightful)

causality (777677) | about a year and a half ago | (#42670323)

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.

Re:time for a outsouring tax? (1)

nickleaton (966500) | about a year and a half ago | (#42669577)

Then you will find that other countries also apply the weeze. Tax US companies operating in their locale on their world wide income

Re:time for a outsouring tax? (1, Insightful)

Austerity Empowers (669817) | about a year and a half ago | (#42670251)

Better idea don't tax companies, tax people. I don't know who thought taxing companies was a good idea, I haven't heard a single reason why we should be doing it and all it does is worsen an already terrifying labor region issue.

Taxing companies SOUNDS like a tax on the rich, but it's really a tax on everyone: people that pay for the tax via sales, and then people who pay for higher income taxes due to the need to fund various benefits that tie in to unemployment (including unemployment itself, but also some of the other social services that the unemployed may use that those with jobs may not).

Re:time for a outsouring tax? (1)

nickleaton (966500) | about a year and a half ago | (#42670481)

It's because its a stealth tax, as you say you don't see it being take. However, consider the UK. We have taxes on insurance. VAT (sales tax), taxes on fuel, taxes on new cars, and taxes to own a car. Get rid of them all, and put it on fuel. 1. Cheap to collect, there aren't many fuel companies. 2. It's very hard to avoid. 3. It's proportionate to your use of the roads. 4. It's transparent - almost. Ideally it should be hypothecated. That tax pays for the roads, no more, no less.

Re:time for a outsouring tax? (1)

bill_mcgonigle (4333) | about a year and a half ago | (#42670177)

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.

Re:time for a outsouring tax? (1)

TheLink (130905) | about a year and a half ago | (#42670615)

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 on it?

Examples: http://www.apple.com/pr/library/2012/10/25Apple-Reports-Fourth-Quarter-Results.html [apple.com]
http://investor.google.com/earnings/2012/Q4_google_earnings.html [google.com]

They both include international revenue as part of their financials.

So if you don't want your foreign money taxed, just leave it overseas, pay whatever tax due overseas (which could be 0%) BUT you shouldn't get to declare it in your financials locally nor use it locally. If you want to use it locally, you have to pay the tax (after subtracting whatever overseas tax you've already paid on it).

Re:time for a outsouring tax? (1)

Anonymous Coward | about a year and a half ago | (#42670535)

Never going to happen. President Obama along with the Democrat and Republican parties dance to their corporate masters' fiddles as they say 'Yes'm. Yes, massa."

Unintended Consequences (3, Funny)

sycodon (149926) | about a year and a half ago | (#42669555)

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."

Re:Unintended Consequences (1, Insightful)

h4rr4r (612664) | about a year and a half ago | (#42669693)

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.

Re:Unintended Consequences (0)

sycodon (149926) | about a year and a half ago | (#42669819)

Who is "our"?

I have no desire to benefit from the Civilization of any of the major urban centers.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42669901)

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.

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42669941)

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 (3, Insightful)

h4rr4r (612664) | about a year and a half ago | (#42670015)

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.

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42670033)

ny is a payer state. it pays for your suburbia.

Re:Unintended Consequences (2)

Joehonkie (665142) | about a year and a half ago | (#42670055)

Yet many of the companies that supply, manage, loan money to, etc. your local stores are in those big cities. Their trucks use national roads and services. So move. To another country. Thanks.

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42670171)

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.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42670439)

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 together. The loss of NYC would impact the USA as much as the loss of DFW. Which is by the way is every bit as much a major urban center.

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42669961)

And you once again completely make up a Strawman so you can post your extremist tax beliefs.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42669993)

What strawman was that?
You wanted to avoid civilization, I was helping you do that.

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42670189)

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.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42670273)

I have no desire to benefit from the Civilization of any of the major urban centers.

So who typed that again?

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42670465)

YOU jumped from my initial statement to avoiding civilization. I merely expressed a disdain for what many people consider "our civilization".

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42670495)

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.

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42669823)

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.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42669925)

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.

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42670077)

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 enables it.

Re:Unintended Consequences (2)

h4rr4r (612664) | about a year and a half ago | (#42670173)

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 called personal responsibility, so I like to do what must be done to make sure I can continue to benefit from our civilization. You could also call it enlightened self interest I guess.

This will really shock you, I just bought a house and I feel they should repeal the mortgage interest deduction. My mortgage is lower than my rent was, giving me a tax break on top of that is unfair to renters and yet another way the less well off are taxed to benefit the rich.

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42670237)

I think this puts you firmly in the pasture with all the other Sheeple.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42670287)

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.

Re:Unintended Consequences (0)

dcw3 (649211) | about a year and a half ago | (#42670593)

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.

Ah, so now people who take legal deductions are crooks and cheats. Let's just be clear, because you don't like it, you've resorted to name calling instead of taking some real responsibility, and trying to get the rules changed legitimately. So, keep on smiling. I'll keep on taking my mortgage deduction, thanks.

Re:Unintended Consequences (1)

h4rr4r (612664) | about a year and a half ago | (#42670617)

I never said that at all.

I said it should be repealed. Meaning I would like to get that rule changed via legal processes.

Re:Unintended Consequences (2, Informative)

causality (777677) | about a year and a half ago | (#42669991)

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 of people: political forces that love the carrot-and-stick methods of behavior control that an income tax provides, and those who have never seriously researched it and have no knowledge of it beyond hearsay.

Re:Unintended Consequences (-1)

Anonymous Coward | about a year and a half ago | (#42670167)

You sound just like a twentysomething libertarian. "It'll work! It works in theory, but you sheeple are too blind to actually /try/ it. READ A BOOK!"

Re:Unintended Consequences (1)

bill_mcgonigle (4333) | about a year and a half ago | (#42670227)

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 merit either - the Fair Tax folks do accurately assess its flaws).

Easier solution: return the USG to Year 2000 levels and completely eliminate the income tax, replacing it with nothing. How would that be for economic stimulus? As the saying goes, "what do you replace cancer with?"

Re:Unintended Consequences (4, Insightful)

h4rr4r (612664) | about a year and a half ago | (#42670333)

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.

Not really true. (5, Insightful)

Viewsonic (584922) | about a year and a half ago | (#42670367)

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:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42670507)

Wrong. Poor people spend 90% on consumption (groceries, baby supplies, etc.). Rich folks hoard. The Fair Tax Act is dumb.

Re:Unintended Consequences (2, Informative)

Anonymous Coward | about a year and a half ago | (#42670561)

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 Cola you're drinking - that's a clear-cut case of consumption isn't it? Or is it? Where did it actually come from, and when was it purchased in the US, in a taxable sense? Maybe it was sold and bought in the US, but the price was $0. Maybe it never was sold in the US, but purchased overseas, and then imported directly by the consumer. Maybe it was worth $0 when it crossed the border, or maybe it the import duty due was less than the tax would have been. Maybe it was simply a gift, from the company that belongs to you (just not in a taxable sense) via a subsidiary on the Caymans, or in Switzerland. Buy? Piffle! You're so rich you never have to buy anything, ever ... in a taxable sense, that is.

All the while $PoorDude is paying 15% tax on every single thing he buys. Or make that a round 20%. Do I hear 25%?

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42670563)

Wrong.
Wrong Wrong Wrong Wrong.
Dangerously, N'th dimensionally wrong.

Taxation of consumption is a horribly regressive tax method and encourages swift accumulation of wealth and inevitably income inequality.

Speaking percentage wise, the rich spend a very tiny fraction of their income on consumption, as compared to the middle and lower income population. Thus, the tax burden is explicitly heavy on the middle class and even heavier on the lower class.

It's also much easier to weasel out of consumption taxes with financial schemes generally only available to the rich. (Think elaborate shell companies/proxies to make all of your purchases for you)

Re:Unintended Consequences (1)

operagost (62405) | about a year and a half ago | (#42670025)

He didn't say we should have no taxes at all, Captain Straw Man.

Re:Unintended Consequences (1)

Anonymous Coward | about a year and a half ago | (#42670129)

If you want to benefit from our civilization you should expect to have to pay for it as well.

I, for one, gladly pay Caesar his due.

Where would we be without civilization, and the ever so civilized drones dropping of missiles on families?

Arms and legs flying apart everywhere, you simply can't buy entertainment or enlightenment like that. Viva civilization!

Re:Unintended Consequences (1)

ShanghaiBill (739463) | about a year and a half ago | (#42670449)

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 companies do not benefit from civilization in proportion to how much profit they make. It would be far better to tax them based on how much pollution they generate or the resources they consume.

Don't raise taxes (1)

Anonymous Coward | about a year and a half ago | (#42669697)

Don't raise taxes and some other country drops theirs and those taxed will find legal ways to move their burden over there.

Drop taxes, and some other country, who doesn't spend as much on, say, the armed forces, will cut their taxes and those taxed will find legal ways to move their burden over there.

Zero taxes and you can't afford a police force and therefore those with money will leave for some place that can secure their wealth.

When will the wealthy stop leeching off the working classes?

Re:Don't raise taxes (1)

g0bshiTe (596213) | about a year and a half ago | (#42669917)

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 (3, Insightful)

wmbetts (1306001) | about a year and a half ago | (#42670233)

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).

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42669711)

Bullshit. They'll (They being any large corp, not just tech firms) find ways to dodge taxes regardless of how "high" they are or weather or not they've been "raised". Even if they paid zero taxes they'd complain that they're not being handed free money by the govt.

Oh wait. They already do that too.

These are the same companies that will give their CEO's multimillion dollar bonuses in the same year that they accept bailout funds.

Fuck 'em. Fuck 'em hard. Squeeze these crooks for every last dime they've stolen. If they complain slap them around and throw them in jail. Remind them that they're lucky not be marched off to a guillotine by an angry mob.

We need to get out of the business of coddling rich privileged plutocrats. We need to stop paying them for the privlage of making untold gobs of cash at the expense of public tax dollars and underpaid workers.

Re:Unintended Consequences (5, Interesting)

SomeKDEUser (1243392) | about a year and a half ago | (#42669727)

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.

Re:Unintended Consequences (2)

H3lldr0p (40304) | about a year and a half ago | (#42669883)

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 situation.

For an economy, it's not. The money, as you said, isn't being maximally invested. A tax on these sorts of savings might be something to get businesses to take a greater risk. But that's the real issue here. The risk. And I don't know how to get around that one.

Re:Unintended Consequences (1)

SomeKDEUser (1243392) | about a year and a half ago | (#42670027)

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.

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42669735)

You're just saying that it is pointless to tax companies, because they are too powerful anyway.

Companies are only a way to allow people to organize themselves and to have a job, so they can combine their efforts to produce something useful for society. They are not a goal in itself. I repeat, a company is not a goal in itself.

You just admit you lost. Either that, or you're a lobbyist.

Re:Unintended Consequences (2)

causality (777677) | about a year and a half ago | (#42670057)

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.

Re:Unintended Consequences (1)

g0bshiTe (596213) | about a year and a half ago | (#42669889)

That's funny, you mention the morons in Congress I fear you are underestimating those morons. I'm sure they know about that already and there's a reason why it's ignored. Raising taxes is meant to put the crunch on the masses not the mega corps that could withstand to absorb 6b a year in taxes. What I want to know is why they are only paying 2.5% vs 6.9%+. That should be your real concern. It seems like since corporate entities are treated like people, people should be able to incorporate themselves in order to get the massive tax breaks or at least be able to use the same loopholes.

Re:Unintended Consequences (1)

operagost (62405) | about a year and a half ago | (#42670049)

people should be able to incorporate themselves

Uh, they can [incorporate.com] .

Re:Unintended Consequences (1)

Ryanrule (1657199) | about a year and a half ago | (#42669919)

Make that illegal then. Boom.

Re:Unintended Consequences (1)

operagost (62405) | about a year and a half ago | (#42670003)

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.

Taxing the hell out of companies is counter to this cause. Of course, that's not news to how most of us know government does not function in a logical manner. The progressives are stuck between a great need to stimulate the economy-- which is driven by businesses, not by workers or people spending unemployment checks like Nancy Pelosi says-- and their constituents, who want to stick it to the "fat cats".

Re:Unintended Consequences (1)

bill_mcgonigle (4333) | about a year and a half ago | (#42670131)

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 into prosperity. If this is true, all the worlds' central banks have been holding out on their people (except for Zimbabwe's, I suppose).

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42670085)

Raise taxes and those taxed will find legals ways to avoid them. Ways that the morons in Congress never anticipated.

I think you meant to say: "Those taxed will find legals ways to avoid them. Ways that the morons in Congress never anticipated."

Re:Unintended Consequences (1)

sycodon (149926) | about a year and a half ago | (#42670319)

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.

Re:Unintended Consequences (0)

Anonymous Coward | about a year and a half ago | (#42670279)

You can't avoid a tax if the tax code simply reads something like, "in no case shall payments equal less than 20% of revenue." Simple. Now find a politician willing to subject business to the same tax burdens that real people face.

I am in no way defending Oracle for anything, but (5, Insightful)

Anonymous Coward | about a year and a half ago | (#42669589)

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 (3, Insightful)

causality (777677) | about a year and a half ago | (#42670157)

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 (1)

alen (225700) | about a year and a half ago | (#42669627)

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

Re:been done for a long time (1)

nedlohs (1335013) | about a year and a half ago | (#42670457)

Unless your marginal tax rate is 100%, something being tax deductable does not make it "like free money".

we... are... nuoh my god that's alot of money (1)

Korruptionen (2647747) | about a year and a half ago | (#42669641)

There is a good documentary on HULU right now that covers this called "We're not broke." This entire problem is a result of actions taken in the 70's. Our government was originally hijacked by banks first, and subsequently many corporations. What this makes me wonder is that if this cash was allowed to "flow back" at once... would it have an measure of inflation with it?

Re:we... are... nuoh my god that's alot of money (2)

SomeKDEUser (1243392) | about a year and a half ago | (#42669747)

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...

This is fine by me (1)

Su27K (652607) | about a year and a half ago | (#42669741)

Science and technology is the only way to make the pie bigger (and it doesn't do this by paying taxes), if any firm deserves a break it's the tech firms.

Re:This is fine by me (0)

Anonymous Coward | about a year and a half ago | (#42669825)

Science and technology is the only way to make the pie bigger (and it doesn't do this by paying taxes), if any firm deserves a break it's the tech firms.

So youre saying that just because they are involved in tech stuff they deserver the ability and excuse to not pay the same taxes as everyone else (should be)? That short minded and really really stupid.

If thats the case then I am developing tech in my home and I shouldnt have to pay taxes either, but youre not so you should have to pay them, and pay more each year to fill in the gaps left by others who dont pay their taxes. Doesnt sound too fair does it?

Re:This is fine by me (1)

Su27K (652607) | about a year and a half ago | (#42670569)

So youre saying that just because they are involved in tech stuff they deserver the ability and excuse to not pay the same taxes as everyone else (should be)?

That's what I just said, wasn't it.

That short minded and really really stupid.

Please give a reason before making a dumb statement like this.

If thats the case then I am developing tech in my home and I shouldnt have to pay taxes either, but youre not so you should have to pay them, and pay more each year to fill in the gaps left by others who dont pay their taxes. Doesnt sound too fair does it?

If you have results to show, then I think it is fair for you to pay less tax because you're advancing human capability and knowledge, which will ultimately benefit everyone.

Re:This is fine by me (1)

Impy the Impiuos Imp (442658) | about a year and a half ago | (#42669929)

Large groups of people follow charismatic leaders skilled in feeding them memes that they are good people, and the corpprations doing the inventing, rotten people, and thus we are justified, with a clear conscience, in seizing someone else's self-made pie slice.

"You didn't make that slice of pie!" >:-( Thus begins the latest meme evolutionary step.

Obama? (-1)

Anonymous Coward | about a year and a half ago | (#42669783)

Good thing Bush now is out of office, so Barack Obama can usher in a new era of transparency and fairness and end the crony capitalism that has plagued this country for years!

Oh, wait.

Re:Obama? (0)

Anonymous Coward | about a year and a half ago | (#42670619)

Obama suckles at the corporate teat with the worse of the Republicans against whom he rails. That man should never have been re-elected but for the poor choice the Republicans put forward. Toss the POTUS a banana as a reward from the zookeeper.

The companies will find a way to keep their cash (1)

davidwr (791652) | about a year and a half ago | (#42669817)

It's up to Congress:

* Make the law match the "talk" and give companies incentives to REALLY keep their money parked overseas.
* Keep things the way they are.
* Try to "crack down" and watch the companies see what other legal tricks they can use.

The "ultimate" legal maneuver to "outwit the IRS" is to move the International HQ overseas and make the US company a subsidiary of the overseas-based company, and make sure the US company never "handles" money that isn't already somehow tied to American operations. If Congress wants this, they can pass laws that will make this option very attractive.

Why compare it to student loans? (4, Insightful)

ranton (36917) | about a year and a half ago | (#42669821)

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:Why compare it to student loans? (0)

Anonymous Coward | about a year and a half ago | (#42669913)

The comparison was probably an instrument to help the author lash out about the differences between the haves and have-nots.

Re:Why compare it to student loans? (2)

Dan667 (564390) | about a year and a half ago | (#42670185)

No, governments should lend money when it is in the public interest. Making low interest loans to students allows them to get good degrees and get much better jobs. They then make much much higher wages, typically get in less trouble, and pay many multiples back in taxes over the course of their lives. Low interest rate loans to students are the single best return on investment a government can make.

Re:Why compare it to student loans? (1)

kaiser423 (828989) | about a year and a half ago | (#42670197)

You can't discharge student loans in bankruptcy. They're with you for the rest of your life. My guess is that they have a similar or better repayment rate than most corporations, which can discharge a lot of this in bankruptcy (not only Oracle uses this specific trick). Those student loans come form the same place as Oracle's borrowing, so it makes sense to ask why twice to three times the interest rate to invest in our workforce than the interest rate to invest in a corporation?

Re:Why compare it to student loans? (0)

Anonymous Coward | about a year and a half ago | (#42670545)

13.4% of student loans default within three years of first payment. The default rate for corporate loans is 1.6%. See the difference?

Not being able to have the loan discharged in bankrupcy does not equate to a guarantee that the lender will ever be paid in full.

corp tax vs capital gains (5, Interesting)

inode_buddha (576844) | about a year and a half ago | (#42669859)

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 (4, Interesting)

the eric conspiracy (20178) | about a year and a half ago | (#42669867)

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 (4, Informative)

IamTheRealMike (537420) | about a year and a half ago | (#42670111)

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.

If the 1% has 40% of the money.... (0)

Anonymous Coward | about a year and a half ago | (#42669871)

why aren't they paying 40% of the taxes?

Re:If the 1% has 40% of the money.... (1)

Rosco P. Coltrane (209368) | about a year and a half ago | (#42669921)

Well, presented with the 2 percentages, they chose to pay 1% taxes.

Re:If the 1% has 40% of the money.... (1)

Anonymous Coward | about a year and a half ago | (#42670631)

actually they do [mercatus.org] . what is troubling is why people like you are so ignorant of this fact.

A Byzantine Tax System (1)

interval1066 (668936) | about a year and a half ago | (#42669881)

As long as we have the current system, there will be loopholes like this.

Tax (2)

Ryanrule (1657199) | about a year and a half ago | (#42669905)

We need a use it or lose it tax.

Not all bad (0)

Anonymous Coward | about a year and a half ago | (#42669985)

Presumably, there are many non-US companies operating in the US, who face a similar dilemma - they have funds in the US which it would be expensive to repatriate. Although the parent countries of those companies are missing out on tax, the expense of repatriation mean that it's more likely those companies will spend or invest those dollars in the US economy. Which seems to me like a good thing - if your company has made a profit out of consumers of a particular country, a mechanism that encourages investment or spending which benefits those people, and the company itself, seems like a win on two fronts.

At any rate, it seems like a better balance than either extreme - letting foreign companies suck money out of a country without any brakes whatsoever, or at the other end of the scale, banning foreign investment completely.

conservatives scream about entitlements (1, Insightful)

Dan667 (564390) | about a year and a half ago | (#42670099)

where are they when people point these massive corporate welfare entitlements?

Who is Surprised? (2)

medcalf (68293) | about a year and a half ago | (#42670245)

People try to maximize their well being. People respond to incentives. If you give them perverse incentives, they respond perversely. Companies, in that respect, act like people, except that it's the executives and board of directors working to maximize their and their shareholders' well being. So who is surprised when companies respond perversely to perverse incentives? If you want companies to act sanely about money, you have to stop forcing them to comply with insane rules. (The several suggestions in this comment section to add more insane rules would just result in a different insane corporate behavior.)

AMT? (2)

apcullen (2504324) | about a year and a half ago | (#42670257)

Seems like what the US needs is an alternative minimum tax for corporations doing business in the states. If I have to pay, so should they.

Student loans (0)

Anonymous Coward | about a year and a half ago | (#42670327)

Are a bit of a scam. 6.8% in today's market is ridiculous.

I just refinanced my wife's loans 2 percentage points lower with a home equity loan. The interest is tax deductible now, too.

Let me get this right ... (1)

therealkevinkretz (1585825) | about a year and a half ago | (#42670577)

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 belonging to someone else.

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