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Tech Firms Keep Piles of 'Foreign Cash' In US
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."
time for a outsouring tax?
Be for long we will need a way to pay for all people in the USA not working.
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.
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?
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
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.
It is a miracle that curiosity survives formal education. - Einstein
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.
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.
1) Policies that allow children to starve in the streets of one of the wealthiest nations of the world are uncompassionate and unconscionable.
2) Policies that have a net effect of subsidizing the production of babies within the poor class are unscalable and unmaintainable in the long run.
Both of these facts are true, and the most natural responses to them directly contradict one another. You cannot address the pain recognized by one fact without causing the pain of the other.
People tend to harp on one or the other, and each camp has a perfectly justifiable criticism of the other camp. Proponents of both camps will feel completely justified by sound logic, and they are both right.
Any possible middle ground will involve some kind of egregious injustice. There is no way to resolve this situation without leaving someone very justifiably pissed off. You can let the poor starve (watch them turn to crime and feel justified by it), you can give them all the free money they need (watch the earners scream about having what they have earned taken from them to feed parasites, justifiably, and watch the population among the poor explode to unmaintainable levels), you can impose limitations on reproductive rights (watch EVERYONE scream about this and enforcement will be a nightmare), you can claim the babies as wards of the state (hah...yeah that will fly). Maybe you have some other ideas? Post them, so the fact that they will not work can be exposed.
If you can't afford kids...maybe you shouldn't have kids?
And naturally if economic conditions change such that you can no longer afford the kids you had during better days you should sell them to the glue factory.
How did people get along before these programs started?
Old people were found dead from malnutrition and starvation, and children grew up with development issues from poor nutrition (costing us more money later when their problems became social).
Why is there such a need for these programs now, but not before. America has always had poor people. Did they really just starve in the streets of the larger cities or even the small ones?
Yes.
What has changed since then?
With cameras, the problems started getting personalized. If you note, the issues have started getting addressed about the time photos were being carried in newspapers, and got more traction when news was in movie theaters. And really took off with TV news.
The problem was ignorable until the piles of dead bodies made it in front of you. Then you'd demand something be done. When you are told about it, but don't see it, it's easy to ignore it. Publicity has changed (And no, I don't mean to imply any hidden media agenda happened or was necessary, just availability of impartial information was sufficient).
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