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Apple, Google among those pushing for US tax breaks

updated 03:15 pm EDT, Sun October 2, 2011

Apple, Google lobby for tax cut to repatriate cash

Apple and Google have been lobbying the US Congress to get tax breaks in return for bringing more of their cash holdings back to the country. A study conducted through Bloomberg has showed a group of 160 lobbyists, headed by Senate Finance Committee chair Max Baucus' former chief of staff Jeff Forbes, trying to persuade politicians that over $1 trillion would come back and fuel the US economy. Many of them have put cash in countries like the Cayman Islands and Switzerland to dodge US taxes but contend that they could improve an ailing economy if it was subject to taxes.

If it were brought back normally, the profits would be taxed at a typical 35 percent minus any foreign tax credits.

The lobbyists and their supporters are a mix of Democrats and Republicans. About 60 of those in the lobbyist group previously worked for a Congress or Senate representative. Supporters are as diverse as Democrat Chuck Schumer and Republican Michele Bachmann.

President Obama and his administration have so far opposed an isolated tax break by citing the fallout from a 2004 measure under Bush as historical proof. The move let companies bring back revenue at a 5.25 percent tax rate, but the $312 billion that came back was used primarily to buy back stock, not to create jobs or invest in research. Such tax holidays, as they are frequently called, are also usually short-lived and wouldn't necessarily address long-term financials.

Concerns exist that the tax cut could deprive the US government of $78.7 billion, negating a significant part of the gains that would come to private business. The government has already been cutting elements to save money but risks being further cash-strapped.

Apple, Google, and other technology companies involved in the lobbying have continued to set record profits that have in part by helped by minimizing their US tax rates. While proponents of tax breaks have argued that some tax revenue would be better than none at all, others have pointed to a better-financed government reducing the need for taxes on the public itself and improving spending power.



By Electronista Staff
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  1. facebook_Justin

    Via Facebook

    Joined: Oct 2011

    -10

    comment title

    Why wouldn't they? The government gives churches tax exempt status, so why not other corporations too?

  1. Salty

    Professional Poster

    Joined: Jul 2005

    -2

    Least helpful comment

    Because regardless of the religious zeal that some people approach Apple with, they're not a religious order, and thus aren't working under the same sort of limitations.

  1. Marc Anthony

    Fresh-Faced Recruit

    Joined: Nov 2009

    +5

    ?

    How is it that these companies were able to expatriate the money in the first place?

  1. chas_m

    Moderator

    Joined: Aug 2001

    +24

    It's unpatriotic

    Previous MacNN articles on this subject mention that what the group wants to do is lower the tax rate -- "temporarily" -- from around 35 percent to 5 percent. As the Obama administration (correctly for a change) cites, history tells us this money would most go to enrich shareholders, not to creating jobs.

    Tell me, have YOU gotten a break like that on YOUR taxes? Do you think you would get such a break if you threatened not to pay your taxes this year unless you did?

    Now that you're done laughing, I could see the gov't maybe offering a small reduction in the rate -- let's be generous and say 25 percent -- in exchange for some strict rules about where the re-imported money could be spent (creating permanent jobs and nothing else), but five percent? That is downright un-American. These companies (yes, Apple included) are already highly profitable but don't want to give back to the econmy that made their fortunes possible. This is what Obama's talking about when he says these companies don't want to pay their fair share.

    If *I* have to pay ~20-30 percent on my income, why shouldn't corporations? Remember, they already get US tax credits on taxes they've paid to foreign governments. This money we're talking about here is just profits they've stashed in tax havens to AVOID PAYING TAXES.

  1. Inkling

    Junior Member

    Joined: Jul 2006

    +14

    comment title

    Speaking of a prior tax cut: "...but the $312 billion that came back was used primarily to buy back stock, not to create jobs or invest in research."

    Does anything think Apple is going to use any of this money to create jobs in this country, particularly outside Cupertino? I don't.

  1. lamewing

    Dedicated MacNNer

    Joined: Aug 2004

    +9

    Unacceptable

    I and you folks don't get this type of tax break. We spend our lives paying taxes (as we should as citizens of the U.S.), but these corporations want a tax break? That is money that should go to help the people of our country. ..the very people who helped these corporations grow in the first place. I had hoped Apple would be above this greed, but it isn't. Well, it helps me decided on what my next phone might or might now be. :(

  1. Salsa

    Forum Regular

    Joined: Oct 2003

    0

    Stupid Penalty Tax

    Do you guys realize that all applicable taxes were already paid when this money was earned? We are the only country in the world dumb enough to penalize our own companies for investing at home. We have the highest corporate taxes in the world, making us less competitive in the global economy. The corporate tax itself is a double tax because the income gets taxed again when it is distributed to the owners.

    The entire tax code needs to be modernized, with lower rates offset by fewer deductions, even popular ones like home mortgage interest and health insurance.

  1. Salsa

    Forum Regular

    Joined: Oct 2003

    0

    Apple needs to invest...

    We need a lot more Apple stores to meet the needs of a very large a growing customer base. The stores I visit are always too packed.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +1

    Re: Stupid Penalty Tax

    Do you guys realize that all applicable taxes were already paid when this money was earned?

    What 'applicable' tax?

    The corporate tax itself is a double tax because the income gets taxed again when it is distributed to the owners.

    The corporate tax is only double-taxed if income is distributed. Many companies, like Apple, don't distribute their income (in the way of dividends), and so there is no double-taxation going on (but it's a good sound bite from the anti-tax crowd).

    The real problem in the US is that the corporate taxes are high, but the capital gains taxes are low. It should be the other way around. Investors aren't creating jobs, they're increasing their wealth. However, corporations are the ones who actually can create jobs. Investors just buy and sell based on stock price value, not on a worth of a company or that they're actually 'investing' in it's future. Heck, besides slashing the corporate tax, they could also give credits for creating 'real' jobs.

    The problem is that corporations can't argue for this switch, because it'll insult the 'investors' who can turn around and do damage on the company by just driving down the stock price in retaliation. And, of course, no one in power is willing to argue this, since all the people affected are rich, and therefore the ones who spend all the money lobbying the politicos not to raise their taxes, since they are the 'job creators' (and doing a great job of it, as it is).

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