Intel CFO: Obama repatriation tax proposal ‘lipstick on a pig’

“Intel chief financial officer Stacy Smith was in New York Wednesday and was kind enough to stop by Barron’s offices for a chat,” Tiernan Ray reports for Barron’s.

“One of the areas where Smith was most passionate was on the topic of President Barack Obama‘s proposal that U.S. companies pay a 14% tax to repatriate their overseas earnings,” Ray reports. “Barron’s magazine executive editor Fleming Meeks asked Smith, ‘What do you make of President Obama’s proposal to allow companies to repatriate overseas cash at 14%. Do you think there’s any seriousness to that?'”

Ray reports, “Said Smith, ‘I’m from Texas, so I’ll use the Texasism: it’s kind of lipstick on a pig.'”

We need fundamental tax reform that helps companies like Intel that are big manufacturers. We are unique in that we do our highest-end manufacturing in the United States, by and large, that’s where our largest factories are. We need something that helps make us competitive on a worldwide stage. And if you look at it, we actually have tax policy that is punitive toward companies like us that create jobs in the U.S., that export outside the U.S., that manufacture in the U.S., and it makes us less competitive with a company like a Samsung or TSMC [Taiwan Semiconductor Manufacturing], which are the people we compete with on a worldwide stage, because they have much more pro-business tax policies. So I think repatriation is one of the things that needs to be dealt with, but it needs to be dealt with in the context of a fundamental changing of our tax policy that helps companies that want to, in my opinion, do the right thing, create jobs in the U.S., and be competitive on a worldwide playing field. – Stacy Smith, Intel CFO

Read more in the full article here.

MacDailyNews Take:

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

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
U.S. Congress, Obama take Apple CEO Cook’s advice, eye corporate tax changes – February 3, 2015
Obama targets foreign profits with tax proposal, Republicans skeptical – February 2, 2015
Senator Rand Paul finds Democratic partner for tax repatriation holiday – January 30, 2015
Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock – November 5, 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

24 Comments

  1. The US tax code will NEVER get simpler. Every loophole and complexity in the tax code was put there to please some special interest. Oftentimes the special interest was a big corporation. At other times it was voters who were essentially being bought off, e.g., deduction for home mortgages.

    If the tax code was so simple that individuals could complete their annual taxes on a postcard and corporations had a simple, straight-forward % to pay, how would our legislators make their money? Selling tax breaks is the business that our politicians are in.

    1. The biggest problem isn’t a loophole or the complexity. It’s the exorbitant tax rate. This tax and spend government is the greediest on the planet. They can’t take enough of our money. It is well past time to downsize the federal government and reduce taxes.

      1. Indeed.

        And yet, just try floating the idea of cutting back on the second-biggest federal budget expenditure, the roughly $800 billion for military/defence, and suddenly the ardent downsizers who wanted a few million cut from PBS get all uppity at you for even suggesting their sacred cow be affected.

        1. I do love the fact that people like to harp on and on about the Defense budget being out of whack (which, btw, I do agree with to some degree).

          However, keep in mind, defense budget spending is barely even half that of “Entitlement” programs and their insane expenditures that the government pukes out each year.

          Mind you; the very mention of the word “Entitlement” in the context of government spending of other people’s money should be laughable from the start, no matter how fiscally responsible.

          What people suggest in radically cutting defense spending while making entitlement spending untouchable is the equivalent of snorting coke to curb your meth habits.

          1. No one here said social programs should be untouchable. Or that defence spending should be cut “radically”.

            Each side has their sacred cows, but one side comes off as far more hypocritical since they’re always demanding lower government spending and “doing more with less”.

    2. Please someone tell me which multi-national corporations you are referring about. I’m not trying to be an ass so don’t get me wrong but I fail to see who you are talking about when you say “special interest or big corporations”. Who the heck are you talking about?

      Is it Caterpillar, tobacco or wine import exporters? I really can’t image any multi-national company who hasn’t set up shop in other countries to keep their foreign proceeds out of the US.

      Please someone explain who “they” are because if it’s not Apple, Intel, MS or Google then who?

    3. The other biggest problem is the unwillingness of the authorities/regulators/politicians to change or remake the rules for today’s necessities and circumstances.

      Changing only the rates without any rules improvement is really futile, it does not help any, it does not resolve anything.

  2. Yes because South Korea doesn’t tax Samsung, Tiawan doesn’t tax Lenovo, Japan doesn’t tax Sony and Sweeden doesn’t Nokia. In order to keep jobs and be competitive on the world stage and due to higher wages in the US, we need more subsidies.

    The banks showed us how it’s done. Let there be more deregulation and less taxes. Because we need to pay our CEOs more money, in the millions, in order to attract talent. $1 billion annually for our CEO is needed, by 2020, just to keep things going. Without this, we are sunk and won’t be able to keep jobs in the US.

    Oh wait…

    1. You’re onto something. Last I checked, the USA was doing pretty well financially compared to almost any other democracy.

      Why is it that the world’s biggest corporations are all headquartered in the USA if it’s so bad all of a sudden? Thanks to all the loopholes added over the years, real corporate tax rates have never been lower!!!

      1. Which measure of “largest corporations” are you using? Revenue? Capitalization? Employees? There are plenty of well-known,large corporations that are *not* headquartered in the USA.

      2. All I can say, in 1947, they were just coming out of the war, and a lot of corporate profits came directly from the government, for the war effort. As logic would see it. But that’s the only thing I can think of, which would effect that graph like that.

    2. Gollum, Crabapple hereby sentences you to a Geography lesson!
      Nokia was a Finnish company. Finland shares a border with Sweden and Norway to the North East.

      But you are right in the sense that Sweden would not tax Nokia as a swedish company! 🙂

      1. lol, give me my lashings.

        I am completely ashamed. This is not a geography issue, as much of a geopolitical issue. I do know better, I don’t know why I said Sweden, the home of Saab, and Volvo. Denmark is the home of Lego.

  3. What was the tax rate, prior to the Civil War?

    Can someone please paint a picture, as to what our Country should look like? Who are and where is the middle class? What about the 1%? Did anyone see that graph? Fairocracy!!!

    Nobody likes to pay taxes. However if there’s a better way, lets talk about it, and agree as to who get’s what.

    We are not gnomes here, with a plan and no formal path to get to the end. We are real people with real needs and EVERYONE has to participate…

    Stop the complaining and start working on a solution that works for all of us. Not just special interests, because heaven help me, special interests are the exact reason we are all complaining in the first place… Real Jerks, they are.

  4. Now remember, the Democrat mantra Apple, Intel, IBM, Joe’s Crab Shack – is “you did not build that.” The government made Apple possible with roads and stop lights. So, all of Apple’s money should go to the government. Well, maybe the Democrats will let them keep a few coins. But most of everything should go to the government, because, well you know, “corporations are evil and they are right now killing the planet with oil and other evil stuff” and the pharmaceutical companies just rip people off when they charge for the drugs that save their lives.

    So, Democrat Tax Policy = all your money is ours. Quit complaining.

    1. Most studies show that the US rate is the same as other countries’ rates once the loopholes are taken into consideration.

      I’ll start paying attention to the CEOs when they start listing loopholes to close.

  5. The President has proposed a lower corporate tax rate and closing loopholes. He would have an even lower rate for companies manufacturing in the U.S. It is opposed by many who make money off the complex code and colorations whose effective rate may approach zero.

    1. consider these proposals with caution. unless they are part of a systematic restructuring of taxes, both corporate and personal, it is just a shell game. from the guy and his administration that does not have a terrorism strategy, it is unlikely they have a tax strategy. don’t confuse ideology with strategy. ideology is strong words. strategy is hard work. in this case. ideology is income equality. strategy is a path to economic growth.

      the flat, simplified tax concepts for both personal and corporate taxes has merit if applied as a holistic systemic program. this will be hard to get accepted if people care more about themselves and their friends than the country. we need more people who are willing to sacrifice more of their personal interests for the interest of the country they benefit from living in. the level of emotional intelligence be able to do that is quite high.

  6. There is a strong effort underway to get the Fair Tax proposal (HR24) moving through Congress. It is superior to the flat tax in many ways and it has many strong supporters in the House and Senate. I think if you look into it you will see that it has much merit.

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