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.