December 23, 2011

POWER WATCH: IT'S NOT A HAPPY HOLIDAY UNLESS IT'S A TAX HOLIDAY, RIGHT, APPLE AND GOOGLE?

Hey, kids. Remember when Apple and Google were totally not liking each other? I mean, you know, like Democracts and Republicans don't like each other? Ah, yes, here's the funny thing. They may not like each other, but gosh, when it comes to not wanting to pay taxes they legally owe to the US Government and by extension to you, my dear tax payer, they are totally on the same page.

Incidentally, that page is one that they mostly hide from the public, because, pssst, you might get pissed off about it, know?

So, since we are all in the "Holiday Spirit" (c) (TM), this is what these companies want to push through, a "Tax Holiday", because as we all know that cash cannot stay on the beaches of the Cayman Islands forver, it's warm and fun there and all that, but you can't really do shit with it while it's there, like buying up your own stock and thus artificially inflate its price.

So, what to do? Do what Google and Apple do. Hire some lobbyists! And tell everybody that the money that was on holiday will "totally make the economy better", or as this article by Bloomberg News states...

U.S. multinational companies have amassed more than $1.375 trillion in profits overseas on which they have paid no federal income tax, according to a recent report by JPMorgan Chase & Co. (JPM) When the earnings are returned to the U.S. -- or repatriated -- they are taxed at the top corporate rate of 35 percent, with credits for foreign income taxes paid.

The companies are pushing to reprise the 2004 holiday that allowed them to bring home offshore earnings at a low tax rate of 5.25 percent. Under that break, companies repatriated to the U.S. $312 billion, largely for stock repurchases rather than direct hiring or investment, according to a recent paper in the Journal of Finance, the latest in a series of studies that reached similar conclusions.

The proposed holiday would reward the companies that have most aggressively parked profits in tax havens such as Bermuda, the Cayman Islands and Switzerland, said Martin A. Sullivan, a former Treasury Department economist and contributing editor for the non-partisan Tax Notes.

“A lot of what companies report as foreign profit is really U.S. profit that should be subject to U.S. tax,” Sullivan said. “Those earnings didn’t get overseas by accident. Many of these companies intentionally put them there to avoid paying U.S. taxes.” 
 Happy Holidays! For you? Nah, most of you are struggling to get some gifts for your children, and if you do get them, they're most likely paid for by debt. But hey, you ain't a corporation, kids.