The latest edition of National Journal magazine has the low-down on a new kind of economic stimulus being touted by tech companies and other corporations with sizable operations overseas:
Seeking rapprochement with the Obama administration, which has been strident in its criticism of offshore tax havens, technology companies with sizable overseas operations are floating a compromise: a temporary tax holiday for American corporations in exchange for more domestic investment. Silicon Valley heavyweights such as Cisco, Oracle, and Qualcomm want to bring home more of the revenue they earn in foreign countries (at lower tax rates)--but only if Uncle Sam cuts them a break on their liabilities here.
Tax cuts for corporate giants might seem like a nonstarter for an administration that has already bailed out the financial sector and General Motors. But high-tech companies insist that it would be a good deal for the United States, providing a much-needed economic boost. A growing chorus of CEOs is trying to convince Washington that at least $1 trillion in earnings parked overseas, much of it generated by Silicon Valley corporations and pharmaceutical companies, would be better invested at home.
"That could be a great stimulus," said Paul Jacobs, chairman and CEO of Qualcomm, in an interview with National Journal at last week's Consumer Electronics Show in Las Vegas. "The truth of the matter is, there's lots of places to invest in the world now, so you don't really need to bring that money back into the United States to run your business."
Jacobs, who has had discussions with administrations officials, has proposed that American companies be allowed to bring overseas profits home--known as "repatriation"--at a reduced tax rate if they agree to use the money for specific purposes such as job creation, research and development, and capital expenditures.
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