This is the part of the tax equations the progressives will never understand, when faced with high taxes those who can afford to will “vote with their feet.” No entity does it better than big corporations.
Faced with the world’s highest corporate tax rate of the leading economic powers, many U.S. based Corporations (such as GE, Pfizer, Microsoft, Apple and others) are keeping their money earned overseas—overseas.
According to the Wall Street Journal, recent filings with the Securities and Exchange Commission showcases that some of the largest companies in the U.S. greatly boosted their overseas cash.
For example, General Electric Company , increased its tax-free cash accumulation to $108 billion, up from an estimated $94 billion in 2010. Microsoft Corporation increased its overseas cash to $61 billion, up 36 percent from 2011 and up from $30 billion in 2010. Apple Inc. raised its amount to $40 billion, up 73 percent from 2011.
Sixty of the country’s larges corporations kept $166 billion in cash outside of the U.S. last year, shielding more than 40 percent of their profits from oppressively high corporate taxes, according to the Wall Street Journal report (from total overseas earnings of $1.3 trillion, up 15 percent from 2011).
A Bloomberg analysis of 83 of the largest nonfinancial corporations found that companies increased by $183 billion their foreign-based cash accumulations, representing a 14.4 percent rise from 2011. Microsoft, Apple and Google Inc. together hold $134.5 billion in cash abroad.
Some others include:
- Pfizer Inc. $73 billion in overseas nontaxed liquid assets in 2012, up from $48 billion in 2010.
- Merck & Co. Inc. $53 billion, up from $40.4 billion in 2010.
- Johnson & Johnson: $49 billion, up from $37 billion in 2010.
- Devon Energy Corp increased its offshore cash by 48 percent last year.
- Occidental Petroleum Corporation up 47 percent from 2011.
- Honeywell International Inc. up 43 percent from 2011.
These companies are not evil, or unpatriotic they are simply executing their fiduciary responsibilities to their shareholders by safeguarding their profits from the most oppressive corporate tax rate of any major economic country…and good for them.
The progressives will tell you that the only way to stem the amount of cash American corporations keep overseas is to penalize (via higher taxes) those funds. However all that will do is force those companies to move their home bases overseas. The ONLY way to bring that money to the US for investment, capital spending and/or even taxation is to lower the corporate tax rate.