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Tech giants enjoy tax-free interest on offshore Treasury holdings

  • Apple (AAPL), Microsoft (MSFT), Google (GOOG) and Cisco Systems (CSCO) hold a combined $124B in U.S. Treasurys and a further $39B in other government debt, the U.K.'s Bureau of Investigative Journalism calculates.
  • The tech giants appear to hold much U.S. debt offshore, which enables them to earn tax-free interest. Repatriating the assets would saddle them with a huge tax bill.
  • Unsurprisingly, Senator Carl Levin is not happy. "If a U.S. multinational puts its offshore cash into a U.S. bank and uses the money to buy U.S. Treasurys, stocks and bonds, those funds ought to be treated as having been repatriated and subject to US tax."
Comments (40)
  • SaltyDog62
    , contributor
    Comments (695) | Send Message
     
    Sounds like Sen. Levin needs a campaign contribution!!!
    13 Mar, 04:49 AM Reply Like
  • Lummox
    , contributor
    Comments (101) | Send Message
     
    Another stupid Politician. He should say thank you for buying treasury notes. The way the government Is burning through money, increasing the national debt, is frightening. The USA needs all the purchasers of US debt, it can find.
    13 Mar, 05:02 AM Reply Like
  • Giesela
    , contributor
    Comment (1) | Send Message
     
    You absolutely right.On another issue , the US tax code consist of 75,000 pages and there more added every year. reduce this by 95% and there will be experts who actually know everything about. As it is right now nobody knows all the implications , and that is probably what the politicians and the IRS want , so they can charge interest and penalties on amounts a lot of tax payers didn't know they had to pay.As for the money that was earned outside the USA it should be tax free ,since taxes were payed in the jurisdiction it was earned in. The US should be glad if money earned somewhere els comes back to the US and could be used to improve the economy.Politicians including the presidents have made such a mess that they get desperate, but instead of improving the system they always make it worse.
    13 Mar, 09:49 AM Reply Like
  • logomerch
    , contributor
    Comments (12) | Send Message
     
    Actually, a law should be passed that would allow that money to come back to the U.S.A without ANY Tax consequences.
    13 Mar, 05:12 AM Reply Like
  • CMPMD
    , contributor
    Comments (94) | Send Message
     
    Only the little people pay taxes.
    13 Mar, 05:12 AM Reply Like
  • ralph111
    , contributor
    Comments (126) | Send Message
     
    a us citizen has to pay taxes on earnings overseas including wages I don't necessarily agree with that especially for those who are self employed outside of the usa but if the individual has to pay so should corp. regardless if they hold cash overseas as long as their domicile is in the usa. In three separate instances on a personal level I have friends whose grandchildren have married autralian citizens and have moved to australia the us tax authorities stationed there made the filing of taxes so difficult that after two years all three just went to the us embassy and opted out of us citizenship. Sad but true. In all cases they were professional women starting a career in a new country fresh out of college joining their husbands in there respective businesses -engineering in the mining industry .
    13 Mar, 05:33 AM Reply Like
  • frrizzo380
    , contributor
    Comments (573) | Send Message
     
    There is a foreign earned income exemption that allows a US citizen to earn $97,600 in a foreign country yearly and not be subject to US taxes. This is increased each year to keep up with inflation.

     

    http://1.usa.gov/N9s1CH
    13 Mar, 07:42 AM Reply Like
  • stuyoung
    , contributor
    Comments (105) | Send Message
     
    Individual income earned outside of the USA is subject to USA taxes only to the extent that taxes owed to the USA (calculated as if earned in the USA) exceed those taxes the individual paid to the country or countries that the income was earned.
    13 Mar, 08:06 AM Reply Like
  • phxcrane
    , contributor
    Comments (415) | Send Message
     
    Pass a law like that and the corporations will soon Be domiciled in other countries.
    13 Mar, 08:52 AM Reply Like
  • jumpnjoey77
    , contributor
    Comments (464) | Send Message
     
    I owned a bunch that did that. The tax reporting nightmare on them forces me to sell them.
    13 Mar, 09:51 AM Reply Like
  • zapbranniganster
    , contributor
    Comments (5) | Send Message
     
    While there is that exemption, you are still required to file a tax form even if you don't owe because of the exemption, and the actual filing can be quite complicated if your pay is over the exemption amount. Also, you now have to file a report on your overseas bank accounts.
    13 Mar, 10:03 PM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    "If a U.S. multinational puts its offshore cash into a U.S. bank and uses the money to buy U.S. Treasurys, stocks and bonds, those funds ought to be treated as having been repatriated and subject to US tax."

     

    Then maybe there ought to be a law that would accomplish this.

     

    I think it's funny to hear US lawmakers complain about US corporations lawfully avoiding US tax. It's not like the tax code was written by Apple.
    13 Mar, 06:37 AM Reply Like
  • Bermbeard
    , contributor
    Comments (2) | Send Message
     
    Actually, "Corporations including Apple have lobbied for changes so they would not have to pay U.S. tax on income earned outside the United States and brought home. Many other countries, including Britain, only tax income earned within their borders, though some international companies have been accused of reducing their bill via sophisticated offshore accounting arrangements."

     

    http://reut.rs/N9yZrf
    13 Mar, 08:29 AM Reply Like
  • brettj89
    , contributor
    Comments (6) | Send Message
     
    Not Apple per se, no. But corporations and the wealthy? Yes.
    You are foolish to argue otherwise.
    13 Mar, 09:54 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    "Not Apple per se, no. But corporations and the wealthy? Yes.
    You are foolish to argue otherwise."

     

    Actually, what's foolish is to not understand the difference between what corporations and the wealthy do ("Lobby") and what the elected government officials do ("Legislate").

     

    You can make the valid point that tax laws are INFLUENCED by lobbying. But tax laws are written by lawmakers.

     

    You don't have to like it but that's how it's done. Rather than bitch about how companies are following the law, maybe mouthpieces like Levin should try to change the law. Better yet, maybe change the process so that lawmakers can't be bought with cash.

     

    Radical thinking, I know.
    13 Mar, 11:44 AM Reply Like
  • NWCats404
    , contributor
    Comments (223) | Send Message
     
    @nguyenvanphuoc: Good points. Politicians like to blame the same lobbyists who bankroll their campaigns and support their plans. People also act like 'wealth redistribution plans' devised by supposed do-gooders aren't promoted by lobbyists. Once these companies set the precedent of handing over their earnings to the tax-man, there is no going back.

     

    @ultraz2: That sounds like a good compromise to me. I can understand both sides of this issue, but it is really to know one's advantage to keep the status quo. Allow companies to repatriate that money at reduced rates with the stipulation that it must be put to use. That would create jobs, incentivize reinvestment in the USA, and hopefully allow the federal government to balance the budget. That last part is wishful thinking, but the first two would happen.
    13 Mar, 12:05 PM Reply Like
  • ultraz2@aol.com
    , contributor
    Comments (294) | Send Message
     
    Allow the money back at 12% tax, and 80 % of it is required to be spent in the USA within 36 months. The balance dollar amount of 20% cannot leave the USA without a 12% tax assessment, until a five year time period has expired.
    13 Mar, 07:28 AM Reply Like
  • HCWHunter22
    , contributor
    Comments (60) | Send Message
     
    That really sounds like a great idea! I do like it, however your proposal would add another couple thousand pages to the US Tax Code and open up yet more opportunities to avoid taxes ("loopholes" depending on your perspective).
    13 Mar, 04:18 PM Reply Like
  • JsThoughts
    , contributor
    Comments (35) | Send Message
     
    The congress can change the tax code any time they want. Politicians are like sales men. Don't listen to what they say watch what they do. For example almost every congressmen says that the tax liabilities for carried interest needs to be changed but they just will not do it. Until the american people demand these changes and tie their votes to these changes nothing is going to change. The privileged will get richer and the rest of us will get the shaft!
    13 Mar, 08:06 AM Reply Like
  • stuyoung
    , contributor
    Comments (105) | Send Message
     
    Many good ideas, however nothing will happen until our horribly disjointed Congress gets their act together and restructures the tax code. At this point I do not support piecemeal tax code.
    13 Mar, 08:10 AM Reply Like
  • Bardstown
    , contributor
    Comments (2) | Send Message
     
    The USA it the only country in the world tax by citizenship and the razon some opt to give at way. I could under stand then . As Ralph 111 say. The only country.?
    13 Mar, 08:50 AM Reply Like
  • Anton Jesuthasan
    , contributor
    Comment (1) | Send Message
     
    What is of greater concern to the economy - short-term or the long term? These giants are US corporations who have proved their mettle over long years, and the use they make of their moneys (including the protem tax savings) strengthens them and the US economy.

     

    The legislation that lets them do this didn't come about frivolously. Don't 'hurt' these geese (one cannot, of course, 'kill' them that easily) that lay golden eggs for the country.
    13 Mar, 08:57 AM Reply Like
  • woppenhe
    , contributor
    Comments (154) | Send Message
     
    Fact is the US is tax unfriendly to corporations. Levin ought be looking at that.
    13 Mar, 09:09 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    "Fact is the US is tax unfriendly to corporations. Levin ought be looking at that."

     

    Sure, but that's not nearly as good a sound bite...
    13 Mar, 09:25 AM Reply Like
  • AutoRegressive
    , contributor
    Comments (177) | Send Message
     
    The tax system is terrible. Why should a company that buys a product in China and sells it in Europe have to pay taxes in the US? What service does the government provide for that transaction?

     

    I love how the gov't is printing money hand over fist to stimulate the economy when all they need to do is allow corporate money to flow back. They can then tax dividends, capital gains and re-tax over and over as the money flows through economic cycle.

     

    Instead they force companies to horde cash, issue debt and give a tax deductions so they pay even lower taxes.
    13 Mar, 10:46 AM Reply Like
  • src2nd
    , contributor
    Comments (33) | Send Message
     
    Using the term "printing money" disqualifies you from any credible discussion of taxes and economics. If you can give a real description of what you mean, in macroeconomic terms, by "printing money", I'll reinstate you.
    13 Mar, 01:37 PM Reply Like
  • AutoRegressive
    , contributor
    Comments (177) | Send Message
     
    Explain to me why I need to defend my use of a common term to you? By using it you know exactly what I'm talking about. Get of your high horse and back to your intermediate accounting studies.
    13 Mar, 10:37 PM Reply Like
  • SHEILA DICKSON
    , contributor
    Comment (1) | Send Message
     
    Coporations are people my friend. If so tax evasion should be
    charged and the representatives of the corporations if found guilty
    imprisoned.
    No one likes to pay taxes however this is the most efficient way
    to provide for the common good in a civilized society. The problem
    is not taxes, but the tax laws that are unfair and put the burden
    mainly on the middle class. These laws permit the extremely wealthy to
    legally evade taxes with built-in loopholes. Therefore such needs
    as military expenditures, infrastructure repairs, emergency/disaster relief,
    public education, are left to the so wealthy. Why do not these corporations instead of hoarding their wealth overseas increase the pay of their employees
    that allow them to obtain such wealth. It has been proven that
    in the last 30 years wealth has increased for the top 4% substantially,
    yet the bottom 50% there has virtually been little or no increase.
    Something is very wrong with this picture. Greed has
    taken the soul of a country and will lead its fall.

     

    13 Mar, 11:00 AM Reply Like
  • src2nd
    , contributor
    Comments (33) | Send Message
     
    Good point. He should use Citizens United to argue that if they want to be treated as people while trying to manipulate the way the country and the economy is run, then they should be treated like people with regards to the tax code and off-shoring money. You can't have it both ways.
    What these people don't get is they are foreclosing on their own favorite Supply-side economic theory: :trickle-down. Now you know why it's other nickname is voo-doo economics.
    And while he's at it, go after the "Carried Interest" scam that Romney brought to light.
    13 Mar, 01:34 PM Reply Like
  • gmmpa
    , contributor
    Comments (462) | Send Message
     
    Spoken like a true communist! Take away all that they work for and send them to jail. The greedy pigs. That is how Putin and his cronies did it. They became billionaires that way, but Nooo... Politicians are not greedy. Then why are Politicians world wide millionaires including those in the USA. Power is a better way to gain wealth then working for it. The bigger the government the easier it becomes.
    13 Mar, 01:59 PM Reply Like
  • NUNAY the KING
    , contributor
    Comments (193) | Send Message
     
    Obviously, a complicated issue. What is not complicated is that the politicians are ALWAYS looking for a way to squeeze more money out of business and the individual. Corporations fight back with lobbyists, the individual fights back with his vote. That IS the razors edge for the politician.
    Do a sound bite against the corporations, get the little guys vote. Meanwhile, back at the office, figure out how to tax the hell out of everything so the bloated, fat pig government can pay for their truffles and caviar.
    13 Mar, 11:02 AM Reply Like
  • gmmpa
    , contributor
    Comments (462) | Send Message
     
    Just imagine how it would be without 80% of the IRS gone and a constitutional amendment for a 12 or 15% flat taxes with no exceptions to the tax code. With a mandatory annual government spending budget based on a percentage of last year's GDP.
    13 Mar, 05:35 PM Reply Like
  • Donjean4
    , contributor
    Comments (8) | Send Message
     
    All this money in overseas banks is not creating jobs here in America. They have paid local taxes so why should they be taxed again. We need to let them bring it back without any penalty since these are foreign funds earned by the American companies. They can then use these funds to create jobs here in America. If we keep forcing them to keep it overseas, they will just produce jobs overseas with that money and that is what they are currently doing. This country will lose good paying research jobs and by now you should recognize that fact. We are cutting off our nose with this battle and Carl Levin is one idiot politician.
    13 Mar, 12:01 PM Reply Like
  • src2nd
    , contributor
    Comments (33) | Send Message
     
    They are truncating the multiplier effect at the Main st. level. You can't ship all that money overseas to manufacture cheap goods in another economy, only to sell them to the people who should be benefiting, the consumer, in your "home" country. It has to go both ways to fit the model. Too much is being syphoned off and going elsewhere.
    Henry Ford had it figured out a long time ago: he wouldn't sell many cars if the people he employed couldn't afford to buy them.
    13 Mar, 01:48 PM Reply Like
  • src2nd
    , contributor
    Comments (33) | Send Message
     
    So much for "Do no evil".
    13 Mar, 01:52 PM Reply Like
  • Greendon2
    , contributor
    Comments (6) | Send Message
     
    I live in Michigan and know Carl Levin , a lifetime politician, well. He is in the pocket of the UAW. I would like to entertain the idea that corporations should not pay income taxes. They can do three things with their profits. 1. Save the funds so someone else would be able to borrow. 2. Invest in new factories and equipment and hire more employees. 3. Pay the money to stockholders, the owners. This would be taxed.
    13 Mar, 12:33 PM Reply Like
  • gmmpa
    , contributor
    Comments (462) | Send Message
     
    Life time politicians cannot exist without taxation. The more money the more power. The trend of this administration and government in general is to become like Europe with a movement toward VAT taxes where they will be able to tax economic production at every stage of the manufacturing process. Add to that the power to regular health, safety and environmental regulations and the politicians can destroy an economy if left unchecked by some moral or statutory rules. Morality is currently in short supply. We are left only with a constitution and very little ability to uphold it except the power of the vote. We need to pay attention to the Carl Levins of the world and those like him that extort campaign donations from anyone that can help his ability to maintain power.

     

    Constitution amendment for term limits for everyone including the judiciary and a little more morality would be helpful. Is that too much to ask?
    16 Mar, 10:14 AM Reply Like
  • combatcorpsmanVN
    , contributor
    Comments (653) | Send Message
     
    When other countries tax rate to repatriate funds is b/w 2 and 5%; why should American corporations pay 35% to repatriate those funds?

     

    Wouldn't it make more sense to reduce the percentage of taxes due on this funds in order to bring money back to the US - especially if companies use those funds to bring manufacturing back to the United States. All we hear is that you can't manufacture anything in the USA b/c costs are too high. Well, that may be true but there is also an argument for the Quality of what is manufactured here as compared to China, Vietnam and other venues off shore. (Disregard GM's latest snafu b/c technology companies shouldn't be 'tarred the same brush' as auto manufacturers).

     

    I don't like to see companies not pay their fair share of taxes, like the rest of us. But, there is a higher thought process here in my opinion. Repatriate the offshore funds, require a quid pro quo use of those funds to be invested in the USA for future manufacturing. Companies are not going to pay another 35% as a gift to these 'brain cells' in Congress to squander the money in new arcane and asinine adventures.

     

    Politicians never see the light until the economy tanks and then they all wonder: "What the hell just happened?"
    13 Mar, 02:26 PM Reply Like
  • Lummox
    , contributor
    Comments (101) | Send Message
     
    Please give list of major of 2% -5% tax rates iin major countries. i.e. England is 28%, for corporations.
    17 Mar, 02:42 AM Reply Like
  • CaptainUSA
    , contributor
    Comments (18) | Send Message
     
    Carl Levin is simply another tax and spend politician.
    15 Mar, 04:01 PM Reply Like
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