Cisco has $40 billion trapped overseas because of the 35% corporate tax rate in the US.
Consider that statement for a moment. This claim was made by CEO John Chambers of Cisco on 60 Minutes. American Companies are avoiding taxes by claiming their HQs are located in Ireland, Switzerland and other countries with lower corporate taxes than the US. How patriotic of these “Americans”. Over $1.6 trillion in profits is being held overseas to avoid these taxes.
Yet, these are the same corporations that have such a loud voice in American government. They lobby incessantly for tax cuts (http://news.yahoo.com/s/atlantic/20110325/bs_atlantic/howgeneralelecticavoidspayingtaxes36088) despite paying the lowest effective corporate tax rate in US history, and the CEO of GE Jeffrey Immelt is President Obama’s choice to lead his Jobs Council, in spite of the fact GE paid ZERO corporate tax last year (http://www.nytimes.com/2011/03/25/business/economy/25tax.html?hp), and yet corporations STILL try to deceive our citizens (sadly, quite successfully) that the US Government is anti-business. Just another example of the culture of persecution that the wealthy elite have built up around themselves. (http://www.salon.com/news/opinion/glenn_greenwald/2011/03/27/koch/index.html)
I doubt that I could, as an American citizen, decide that I am now a Swiss citizen and avoid taxes. I know what you’re going to say: Corporations aren’t people. Well, of course they’re not. I suppose that’s why the Supreme Court granted them the right to free speech. (http://www.csmonitor.com/USA/Justice/2010/0121/Supreme-Court-Campaign-finance-limits-violate-free-speech)
Now, let’s consider that $40 billion that John Chambers claims is trapped overseas and that he “really wishes” he could move here. If Cisco would simply do like every patriotic American is expected to do and pay their fair share of the taxes they owe, they could move that $40 billion back to the US, pay the $14 billion in taxes they owe, and still have $26 billion left to create jobs in an economy that would be in much better shape thanks to the recovered tax revenue. But this is not about creating jobs or the economy. This is about maximizing profits at any cost.
Despite the stimulus and generous tax breaks over the past few years (welfare to corporations, really), companies set a new record in holding onto their cash, despite their promise to create jobs (http://online.wsj.com/article/SB10001424052748703766704576009501161973480.html) In my hometown of Winona, Fastenal Company decided to pay out a dividend to their stockholders rather than invest in growth. Meanwhile, unemployment continues unabated.
So, to sum up… corporations get huge tax breaks (or REBATES, or BAILOUTS) but still decide to invest overseas and do not use their record-breaking profits to invest in growth. Meanwhile, the GOP continues to push for cuts to unemployment, Social Security and Medicare – programs that serve the most vulnerable in our society. Is this economic growth supposed to happen magically? No. What they appear to be building is a situation in which you will be so grateful just to have a job that corporations will be able to pay you third world wages.
Now who’s trapped?