The large corporations that have huge profits deposited in tax havens outside the United States are pressuring the Congress and Obama administration for tax cuts to bring these huge amounts in the mother country, writes New York Times.
Apple (NASDAQ:AAPL), Steve Jobs’s company holds $12 billion in tax havens, Google (NASDAQ:GOOG) has $17 billion and Microsoft (NASDAQ:MSFT) no less than 29 billion dollars.
“For every billion dollars we invest, we create 15,000 to 20,000 new jobs”, said Jim Rogers, Duke Energy Director at the conference held a week ago. Duke company has 1.3 billion dollars outside the United States.
A similar situation occurred in 2005 when Congress and the Bush administration reduced corporation taxes, encouraging large companies to bring in the country 312 billion dollars.
Studies have shown that, despite expectations, 92% of that amount was returned to shareholders and suppliers; on the other hand investment in labor, research and development were not significant. Pharmaceutical companies have had much to gain from tax cuts, and other companies as well, namely Ford (NYSE:F), Pepsi (NYSE:PEP), Honeywell (NYSE:HON), Merck (NYSE:MRK), Pfizer (NYSE:PFE). Hewlett-Packard (NYSE:HPQ), for instance, repatriated 14.5 billion dollars in 2005 and soon after announced that it will eliminate 14,000 jobs.
The figures show that termination of tax regulation in 2005 was unfortunate for the United States, specifically companies brought into U.S. 312 billion dollars and paid taxes of only 16 billion.
L. Allen Sinai, economist at Decision Economics, argues that tax cut would benefit the U.S. now only if the employment and investment procedures would be restricted.
Tax reduction would still be a great compromise for the budget of a country that still has an unstable economy strongly affected by the recession, high unemployment rate and many opponents of the initiative on the part of the Republicans and Democrats. President of the Service Employees International Union said the that the amount outside the country does not help the at all economy, therefore, certainly something must be done about it.