Silcon Valley's response.....

By MICHAEL LIEDTKE

SAN FRANCISCO (AP) - President Barack Obama's plan to impose U.S. taxes on corporate America's overseas profits threatens to open a big crater in the financial statements of technology companies.

While additional taxes are rarely popular, Obama's decision to go after corporate earnings outside the United States is a particularly prickly subject for technology executives because the industry has been steadily boosting its overseas sales amid rising demand for its gadgetry and services.

If Obama's proposal becomes law, the hard-hit companies would include tech bellwethers like Hewlett-Packard Co., IBM Corp., Cisco Systems Inc. (CSCO) (CSCO), Microsoft Corp. (MSFT) and Google Inc. (GOOG) (GOOG) Each of those companies realized a benefit of more than $1 billion from lower foreign tax rates in their most recent fiscal years - an advantage that could lost if Obama is able to change the rules.

"It would be like an earthquake for high tech," said Carl Guardino, chief executive of Silicon Valley Leadership Group, an industry trade association. "On a Richter scale of 1 to 10, this would be a 12."

Collectively, HP, IBM, Cisco, Microsoft and Google lowered their tax bills by a combined $7.4 billion in their last fiscal years by taking advantage of lower tax rates outside the United States, according to an analysis by The Associated Press.

Through the years, these five tax companies have avoided U.S. income taxes and foreign withholding taxes on a combined $72 billion in undistributed earnings from their foreign operations.

While Obama's proposal might not tax all the money U.S. companies keep overseas, it apparently would target a big chunk. Obama estimated his plan would raise a total of $210 billion, or an average of about $21 billion annually, over a 10-year period.

By reinvesting their earnings overseas, U.S. companies insulate themselves from much higher tax rates had the money been made in their home country.

Google, for instance, would have been hit with an effective tax rate of 45.2 percent instead of 27.8 percent last year if it hadn't been able to capitalize on lower rates overseas, according to the Mountain View-based company's annual report. Without the lower foreign rates, Google's 2008 tax bill would have been $1.02 billion higher. Google's income before taxes totaled $5.85 billion last year.

Obama has been strongly supported so far by Google CEO Eric Schmidt, who campaigned for the president last year and has subsequently served as a technology adviser.

Google spokesman Adam Kovacevich said Monday it was too early to evaluate how Obama's tax proposal might affect the Internet search leader's operations because the idea is likely to be revised as it wends its way through Congress.

HP reaped a $1.77 billion benefit in its fiscal 2008 from lower foreign tax rates while Cisco and Microsoft each saw benefits of more than $1.6 billion, according to the companies' annual reports. IBM's foreign tax advantage last year totaled about $1.3 billion.

The high-tech industry isn't the only beneficiary from the current tax rules. General Electric Co. (GE), for instance, lowered its effective tax rate by nearly 27 percent last year by keeping profits outside the United States. That saved the company more than $5 billion in potential U.S. taxes.

And offshore earnings enabled drug maker Johnson & Johnson (JNJ) to lower its effective tax rate by 12.4 percentage points last year, saving about $2 billion.

Obama reasons that U.S. companies will create more jobs in the United States if there is less of an advantage to setting up operations overseas.

But Guardino disagrees, maintaining that high-tech firms and other U.S.companies are establishing more foreign offices to take advantage of their biggest growth opportunities. And as they bring in more revenue overseas, companies are also able to hire more workers in the United States as well as in other countries, Guardino said.

As it is, Google already generates more than half its revenue outside the United States and that percentage is expected to increase as more people around the world go online and gravitate to the company's services.

If they face higher taxes on their foreign earnings, high-tech companies will be at a competitive disadvantage that will discourage them from expanding their payrolls, Guardino said.

By coincidence, Guardino and about 50 Silicon Valley executives had already scheduled a trip to Washington this week. Guardino said the group plans to focus on meeting with lawmakers to explain why Obama's idea to tax overseas profits would do more harm than good.

Ah I see, of course it ignores the estimates that say a national sales tax would be much larger than 10%, some estimates as much as 50%. But I do see the concept at least now.

For the record if I made 16k I'd feel like I was pretty ripped off. Be a pretty huge incentive not to report that last 1k of income. You'd be better off to tell your employer not to give the money. That give you a net increase of $200 at the end of the year.

Ad lib, as in

ad lib·i·tum (ăd lĭbĭ-təm)
adj. Music



At the discretion of the performer. Used chiefly as a direction giving license to alter or omit a part.

You cant just add words and phrases to make the document mean what you want it to appear to mean!.

Like this!


So who wrote this?

WHO IS GOING TO HOLD THE GOVT ACOUNTABL AND ENFORCE THE DECALRATION OF INDEPENDANCE

Enter the 2ND Amendment!



that is my argument against gun control

i wrote it

and backed it with other documentation

if it is not in the declaration or constitution i wrote it

unless it is a definition of what is in the declaration or constitution

i am more than likely not the first to do so

but i did it in that script

Good Post^^^

Why wouldn't a sane person stop to think about the cost to the end user of highly taxed imports?

They will have to if they want to compete with American Mfg who won't be paying that tariff.

call me crazy...but I can't wrap my head around everyone talking about BHO inheriting this mess because of Bush (1 man) but then say BHO can't do it alone and and that if his promises don't go through...it's the governments fault.....did Bush not have a house and senate?

Because the sane person isnt getting the break given to the corporation to move overseas.
The sane person just loses their job and has their standard of living lowered!
Does a sane person expect the corporation to give a damn about the American family?


The tariffs are paid at the dock and result in a fair market place here at home for American based corporations.
The largest consumer market in the world.
It doesnt make it hard for them unless they cant produce quality!
It creates a fair market value based on our living standard, our quality standards, our environmental laws, and our consumer safety laws.
Not those of third world and communist regimes!

Corporations will threaten, but when they see they will lose their largest market or end up paying the same tariff if they leave, I'll guarantee they'll stay here!

This is a perfectly good thread.
Why the duplicate?

Not a duplicate.
It's the other side of the story.
Not associated with BHO.com.

Big business is scared of having their loopholes and shelters taken away.

You mean it doesnt have the twists and half-truths?
Looks the same to me!

We see it a bit differently but we both see it working so I guess that's what counts.

That is the only way for making it fair. I never said it would work.

for all the stuff that Bush screwed up, this economc crisis is one thing that wasn't his fault. It is a result of Congress thinking it could tinker with the economy to perform social engineering. and now they are tinkering with it further thinking they can fix it.

and everybody knows that the gubmint screws up everything it touches

Phil Gramm (a Repub) and his ENRON lobbyist wife!

You see it as fair that someone on the bottom of the pay scale should pay every dime they have to the government and still owe more?

Is it fair that the man who makes 10 million pays millions to the federali but the guy at the bottom receiving welfare pays none?

That is the difference here. I fully believe that is more fair than we have now. If you go to a restaurant to eat dinner, do you get fed even though you can only pay half the tab? Hell no. Same idea here. Why should someone reap all the benefits when they are not paying in themselves?

It's a fundamental difference in ideology. If privileges and opportunity are to be equal to all, should not the costs be as well?

It appears to be so!

An honest man!