"American CAD companies have been deferring payment on millions of dollars of profits by leaving the them in bank accounts held by the non-US subsidiaries that earned the profits. The reason: whe
Image via Wikipedian US companies import cash earned abroad, they pay 30% in tax to the US government. The exception: companies can loan themselves their foreign money for a maximum of six months.
Some ceos, like Carl Bass of Autodesk, have been petitioning the US government to eliminate the tax, saying they would prefer to pay only the tax rate of other countries. (why doesn't that suprise me?) With the US having the second-highest corporate tax rate in the world, this would save US companies a bundle -- perhaps as much as $80 million, in the case of Autodesk. But it appears that the opposite may happen.
Bloomberg is reporting that the proposed US budget for 2010 appears to contain an item that ends deferral: you pay your US taxes in the same year you earn the income at the foreign office. (gee, big corporations being treated like everyone else, how unfair, there must be SOCIALISTS running things in Washington!)
If nothing else, the end of the deferral may encourage US businesses to bring back profits from overseas subsidiaries to their home country now, which can then can be put to use stimulating the US economy."
Image by martnpro via Flickr
Still naive after all these years...
Now perhaps they will have enough capitol to buy back some of the jobs they shipped overseas during the 80s and 90s. Perhaps "insourcing" is the next big thing since companies will have to do something with the profits they have been hiding from the tax man for all these years...
Image by progecad via Flickr
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