Senator Rand Paul finds Democratic partner for tax repatriation holiday

“Senators Rand Paul and Barbara Boxer are proposing a tax incentive for U.S. companies to bring home their offshore cash stockpiles and pledging to use that revenue to fund highways,” Richard Rubin reports for Bloomberg. “The bipartisan proposal would let companies repatriate money parked overseas at a 6.5 percent tax rate, a steep discount compared with existing law. ‘This would mean no new taxes, but more revenue, and it is a solution that should win support from both political parties,’ Paul, a Kentucky Republican, said in a statement Thursday in Washington. Boxer is a California Democrat.”

“Under current law, U.S. companies must pay the full 35 percent tax rate when they bring home profits from overseas, after receiving credits for foreign taxes they have paid. Because they can delay that tax until they repatriate, the tax code gives them an incentive to book profits overseas and leave them there,” Rubin reports. “It’s not clear that the Paul-Boxer plan would actually raise revenue. The nonpartisan Joint Committee on Taxation, the official scorekeeper for tax bills, said last year that a similar proposal would raise money in the first few years and then cost the government a net total of $95.8 billion over a decade. That’s because companies would interpret a repeat of a tax holiday enacted in 2004 as a sign that they should shift even more profits outside the U.S. in anticipation of another holiday.”

MacDailyNews Note: Apple currently has $178 billion dollars stockpiled, 89% of which, or $158.42 billion remains offshore.

“U.S. companies have stockpiled about $2 trillion outside the country, in part because that’s where they’re earning profits and in part because they have used accounting maneuvers to book profits in low-tax jurisdictions,” Rubin reports. “Companies including Apple Inc., Qualcomm Inc. and Google Inc., all based in Boxer’s home state, lobbied Congress in 2011 for a repatriation tax holiday. They didn’t succeed.”

Read more in the full article here.

MacDailyNews Take: The U.S. corporate tax rate is way too high. Obviously.

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

Related articles:
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013

51 Comments

    1. Wellllll because he won’t give you free money from his Staaaaaaash!!!! Don’t you know? No free money & healthcare … NO VOTE. This is AMERICA!! Land of the Modern Day Worker Slaves. Blue, purple, red, green… It don’t matter if you are willing to work….??? they take YOUR money & give it to others that don’t work. See they deserve your hard earned cash. OBLAH BLAH knows… Just ask Joe Plumber. How soon we forget.

      1. Maybe it’s better to give corporate welfare to banksters, oil barons and other deep pockets. Paul is backed financially by the Koch brothers who pollute the land with their oil and chemicals and want to eliminate the EPA so as to avoid liability. Paul wants Worker Rights. That’s doublespeak, he wants to get rid of unions, and essentially get rid of worker rights. Government won’t protect workers, because big money owns the government. When unions go, so will 8-hour work days, overtime pay, pensions, safe working conditions, and a ton of other deals that unions have given us from much hard fighting. You won’t complain because someone else will do your job practically for free, which is a race to the bottom. Necessities we take for granted will disappear easily, and I’m sure laws will follow to cement this new deal, and America will revert to conditions of the start of the industrial revolution, a virtual slave state.

          1. George Soros, the favorite boogeyman of the extreme right, has nothing compared to the Koch brothers. Democrats have warned that they will be completely overwhelmed by the Koch’s plan to buy the next election. http://www.usnews.com/news/politics/articles/2015/01/26/at-koch-summit-rand-paul-splits-with-cruz-rubio
            Also, Paul is very much after the Koch’s money. http://www.nationaljournal.com/politics/rand-paul-stands-apart-in-his-pitch-for-koch-brothers-cash-20150126
            But, believe whatever you want. Any attempt to correct incorrect beliefs will only cause them to be more entrenched. Enjoy the ignorance.

            1. The Koch Brothers, the favorite boogeymen of the extreme left, has nothing compared to George Soros. Republicans have warned that they will be completely overwhelmed by Soros’s plan to buy the next elections.
              Also, Hillary Clinton, like her husband before her and Obama after him, is very much after Soros’s money.
              But, believe whatever you want. Any attempt to correct incorrect beliefs will only cause them to be more entrenched. Enjoy the ignorance.

            1. i don’t know how the Koch brothers don’t show in your site, but I’ve heard in independent news channels that the Koch brothers do back Paul. If you read or listen to Paul’s words, he proposes to dismantle the EPA, which is the dream of the Koch brothers, and he has a National Workers Rights platform. You should read about the environmental damage that the Koch brothers have done.

            2. You’re the jackass, jackass. I can’t find a big name website tying Paul and Koch. In fact there’s much spin separating them. The funny thing is, Paul’s pushing their agenda. As for the site you gave, here’s another saying that Soro’s donations are accounted for, whereas the Koch empire donates Dark Money: http://billmoyers.com/2014/04/10/nothing-really-compares-to-the-koch-brothers-political-empire/ You don’t like the EPA, so I guess you like cancer and a poisoned life. Careful what you wish for.

        1. The Obama administration has given more free money to bankers than any other. It is riddled with Wall Street insiders. They don’t call him “President Goldman Sachs” for nothing.

        2. Before you start spreading BS about Rand Paul being supported financially by the Koch brothers, please site your source of that information. It is simply not true.

          Also, you say workers’ rights go hand in hand with unions. That’s a load of crap. Unions only care about themselves. Only individuals have God given rights. This is documented in the Constitution. Unions nor corporations or any other “group” for that matter should have any rights.

          1. i heard it on the news, months ago, and I can’t remember where, and there’s more online of Paul distancing himself. Still, his campaign platform pushes giving them license to pollute our land and water. You won’t benefit from letting corporations dump in your drinking water or parks, but the Kochs will. With unions, you haven’t studied history. If she legally could, your boss would find it profitable to have you and your five-year old kid working 18 hours a day in a toxic environment for a dollar an hour, because that’s your God-given right. I do agree with you that unions and corporations and should not be considered people under the law.

            1. typo. I meant to say that I agree with you that unions, corporations and groups should NOT have the rights of an individual. But they do, and those rights are based on the constitution. The Supreme Court has a twisted interpretation of the 14th amendment. It’s a bad deal for the common man.

      2. ijah420: I don’t think sinking to the level of buffoonery of Sarah Palin is going to help anyone’s cause. There are actual, no propaganda BS spin required, problems with what we’ve endured from BOTH DemoCraps and ReTardlicans. What Rand Paul represents is a significant break and additional level of sanity above what is currently called ‘Republican’. The guy isn’t perfect, but he’s got more sense than 90% of the elected morons in DC.

  1. Prior to passage of the tax holiday in 2004, proponents sold it on the basis that companies would return money to the U.S., invest it in U.S. operations, and thereby spur employment. Economists warned that the holiday was stupid–that there was no reason to believe companies would use the money as represented and that the main result of the holiday would be that companies would be further encouraged to hoard money abroad and then push for another tax holiday. They also opined that companies would then have less reason to push for rationalizing US tax policy given the massive rate reduction they’d gotten through the holiday. (After all, who would push for lowering taxes to 15% when you just got a cut to 6.5% by holding your breath long enough?)

    The 2004 tax holiday did as the economists predicted, and not as the politicians promised. Companies used returned money for profits to shareholders or, quite often, to provide capital to move jobs overseas.

    Politicians are making the same promises now, and economists are giving the same warnings.

    The tax holiday is idiotic policy.

    And the reason the tax rate is so high is that very few companies pay it. A large sticker price is used to mask the minimal actual tax rate most large companies pay. U.S. companies pay an effective tax rate of 12.6% not 35%.

    Abolishing most corporate tax breaks at instituting a standardized 15% tax rate would be the best policy, but won’t happen because the high stated rate is needed to keep the countless existing breaks companies want to retain. And whatever pressure does exist for reform would die with Apple et al. getting a tax holiday.

    Paul’s tax holiday is not only idiotic policy, it is also the quickest, easiest way to kill off corporate tax reform.

      1. No, but it is idiotic policy to enact policy that encourages companies to hoard money abroad for a decade waiting for a tax holiday. Your house would have liked getting those profits for the last ten years, and your house would like getting profits for the decade following any tax holiday where profits will be hoarded abroad again awaiting the next holiday.

        1. further:
          “…we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S.”

          Apple CEO Tim Cook is echoing exactly what Rand has said over and over.

            1. The current bill itself (Invest in Transportation Act of 2015- Boxer/Paul) has yet to be finalized and introduced into the congressional record, so I am unable to reply precisely to your excellent point. When it is, I will certainly post the link to the actual text of the bill, as I would like to read exactly what it says also.

  2. First of all the REAL corporate tax rate in the US is not anywhere near the listed number. Nobody with a decent tax lawyer pays anywhere near that. If our corporate taxes are so high how do highly profitable companies get refunds from the Feds?

    Now that that bullshit has been cast aside, the bigger issue: infrastructure. Much of our infrastructure is EOL or in desperate need of updating. Estimates vary, but we need about $2-3 trillion to bring roads, bridges, airports, water systems sewer systems, etc up to date. If that can be accomplished by this measure in some significant way, go for it.

    Anyone who travels around the US knows our infrastructure needs a makeover and anyone who has lived or travelled outside the US knows how far we have fallen behind. Our economic future is highly contingent upon a solid backbone of transit, water and communications.

    We had the money to bail out the banksters, we had the money to fight Bush’s Wars for Oil, we have money for tanks the Army does not want and fighters that will be obsolete the day they are made. I think we can afford to do this.

    As to tax reform, Senators and Representatives have no political interest in an efficient tax code. Much of their business and many their contributions are derived from exceptions, waivers and carve outs to the Byzantine tax code.

    1. +100

      US infrastructure was once the envy of the world, back when sane and responsible leaders like Eisenhower were in charge. But the Republican quest to cut taxes, mostly for the rich, combined with the Democrats’ determination to preserve social programs rather than maintain our legacy infrastructure (and everybody’s lack of vision to build new), makes us look like the third world. And if you don’t believe it, let me take you on a tour of Shanghai’s Pudong district – an urban center that outclasses ANYTHING in America. Or take a ride on high speed rail to Changzhou, at speeds that are several times faster, quieter and more comfortable than any commuter line in the US. “The greatest nation on Earth” is a bad joke.

  3. I would love to see a flat tax rate for individuals (with no loopholes), a competitive corportate rate to allow Apple and others to keep our profits at home, and SERIOUS campaign finance reform. Unfortunately, like DavGreg said- our political system depends on influence peddling by the rich and pandering to the poor and lower middle class-ho pay no taxes

  4. ‘This would mean no new taxes, but more revenue, and it is a solution that should win support from both political parties,’ Paul, a Kentucky Republican, said…

    Except that the rabid, Obama-hating wing of the Republican controlled Congress will never pass any bill that might give the President a positive bipartisan piece of legislation to sign. Despite all the gum-flapping talk about bipartisanship by both parties, I think it will be 2 more years of stalemate, and infrastructure be damned.

  5. Foreign made profits don’t need a ‘holiday’. They need a permanent change to a sane level of taxation. 6.5% forever sounds fine to me. Get the money INTO the USA and let it do its work inside the US market generating new profits. Why is this so difficult for assTards like Carl Levin to comprehend?

    1. Because it’s not that simple.

      FIRST balance the budget including a plan to pay down accumulated debt, THEN you can calculate the tax rate. Pulling “fair” tax rates out of thin air is foolish.

      What nobody is willing to admit in the USA is that we do need relatively high taxes to pay for the accumulated debt from foreign wars and 5 decades of deficit spending from BOTH corrupt parties. Interestingly, anyone who does the research will find that the debt has increased more under republican leadership than under democrats — mostly because foreign nationbuilding is more expensive than fixing problems at home. But instead of implementing pragmatic reforms on the spending side, the last 13 years have seen military budgets bloated out to insane levels, not even counting all the veterans benefits that will be paid out for decades in the future. Camping US troops overseas is the first thing congress needs to halt IMMEDIATELY.

      1. The foreign made profits aren’t coming into the USA. That’s the current state of affairs. What’s wrong with this picture? Kind of DUH.

        As for the insane budget busting, largely (not kidding!) from the Republicans, but damned well from the Democrats as well, I’m with you! Total agreement with your concepts to get this lunacy wiped out and sane budget restraint back in.

        Disturbing this week: Obama asking for spending increases in this time of ‘prosperity’. Idiotic. Sort out the budget and make room for spending. That’s sane spending policy. We need new and repaired infrastructure. Cut outside-the-USA spending to pay for it AFTER the budget is balanced.

      2. would it not be helpful in balancing the budget to have a return of revenue from corporate taxes from zero (which is what the treasury is getting now from corporations who keep their profits overseas) to, say, 6.5%? Would it not also be helpful in balancing the budget to allow the free flow of capital back in the United States as both Cook and Paul have suggested?

        I completely concur with your argument on the US military expenditures whose current cost is more than every other country on the planet combined. And you are most likely correct that it is the first priority.

  6. Even though many of the commenters are pissing on each other, I do sense some common themes I think most of us can agree on:

    1. The politicians of both parties are worthless. As a R or D you will say the other side is more worthless, but let’s be realistic, both sides are god awful.

    2. To improve and simplify the tax code requires that all the loopholes and deductions be eliminated. But since those loopholes and deductions all benefit someone, they will never be eliminated.

    3. The US deficit is too high and needs to be reduced. Some say the cure is more taxes, some say the cure is less spending. Unfortunately, until the politicians show they are willing to spend less, many are unwilling to give them more taxes.

    And here is a final thought. If we started to agree on some of these issues we could pressure the politicians to get their shit together and improve our country. But since we spend all our time pissing on each other, the politicians feel no pressure to do the right thing.

    Maybe that is by design.

  7. Tax cuts for the rich and corporate welfare? Well that strategy is exactly what W did to completely destroy the US economy and get us into record debt. So what could go wrong?

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