It's no secret that the US government wants companies to bring more of their offshore profits back home for the sake of taxes, and it's now exceptionally clear as to why. Bloomberg has sifted through financial filings and discovered that the top eight American tech firms, including Apple, Google and Microsoft, are keeping more than $420 billion overseas -- $69 billion of it added in just the past year. That's over a fifth of the $2.1 trillion held abroad by American companies, and would easily cover a lot of government expenses. A tax on Microsoft's profits alone ($29.6 billion) would cover NASA and the Commerce Department; Apple ($23.3 billion) could take care of the Transportation Department and Social Security, and Oracle could foot the bill for the Labor Department.
The reasoning for this creative accounting is the same as always: the companies don't want to pay the full US corporate tax rate (including repatriation taxes) when they know that they can easily shuffle that money elsewhere and shell out much less. It may be tough to keep this income out of the States forever, though. While President Obama didn't have much luck this year with a measure that would slap taxes on both past and ongoing foreign earnings, he's continuing to talk with executives in hopes of reaching a compromise. It's hard to imagine officials simply walking away from a huge potential revenue source.
[Image credit: AP Photo/John Cogill]
Filed under: Misc, Apple, Microsoft, Google
Source: Bloomberg
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