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U.S. Companies Now Stashing $2 Trillion Overseas

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TheDemSocialist

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U[FONT=proxima_nova_rgregular]U.S. companies are for the first time holding more than $2 trillion overseas, according to an analysis that paints a bleak picture of whether that money will make its way home and the limited economic impact it would have even if it does.[/FONT][FONT=proxima_nova_rgregular]Corporate cash has hit $2.1 trillion, a sixfold increase over the past 12 years, Capital Economics said, citing its own database as well as that of Audit Analytics and other sources. There is no official total, but the firm also used regulatory filings that included "indefinitely reinvested foreign earnings" to glean the total sitting outside U.S. borders.[/FONT]
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[FONT=proxima_nova_rgregular]"The latest signs suggest that, as business confidence improves in light of the continued economic recovery, U.S. firms are starting to hold less cash domestically," Capital economists Paul Dales and Andrew Hunter said in a report for clients. "However, the foreign cash piles of the largest firms have almost certainly continued to grow."
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Read more @: U.S. Companies Now Stashing $2 Trillion Overseas

If only the $2 trillion would trickle down! But hey even if our tax laws are reduced (even tho we have a pretty damn low effective corporate tax rate), would be reduced it would do little to the economy. [/FONT]
 
It's not sitting there in an big pile or some vault in Switzerland. That money is in use and paying investors large and small, salaries large and small. Americans can and do invest in the FOREX. A lot of American retirement income is from such investments.
 
TheDemSocialist said:
Read more @: U.S. Companies Now Stashing $2 Trillion Overseas

If only the $2 trillion would trickle down! But hey even if our tax laws are reduced (even tho we have a pretty damn low effective corporate tax rate), would be reduced it would do little to the economy. [/FONT][/COLOR]
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Exactly. It's money that these company don't need, so they leave it where it is to avoid taxation. If it was needed for expansion (to meet demand), then it would be repatriated, regardless of taxation.

Now let's say that we had a tax holiday that would allow this money to come back to the US with no taxation. Even then, much of it likely wouldn't come back, simply because it's not needed by the corporations.

But let's say that it did come back, and was deposited into US banks. So what? It still wouldn't create additional demand, and thus wouldn't result in job growth or wealth production. Our banks are already fully supplied with all the money they need to lend to every single credit worthy person who is willing to borrow - our banking system is designed that way. So that money would just sit idle, most likely being deposited by the banks into their accounts with the fed.

The reality is that it's excess money that simply isn't needed to fill demand.
 
clownboy said:
It's not sitting there in an big pile or some vault in Switzerland. That money is in use and paying investors large and small, salaries large and small. Americans can and do invest in the FOREX. A lot of American retirement income is from such investments.
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Uhhh: "most of that cash was used to fund dividend payouts and share buybacks rather than to boost investment." A Democratic congressional report indicated that the biggest companies receiving the benefits of $360 billion in repatriated funds actually cut a net 20,000 jobs, and that the holiday cost Treasury coffers $3.3 billion... Very little, then, went to hiring and reinvestment."
 
TheDemSocialist said:
If only the $2 trillion would trickle down! But hey even if our tax laws are reduced (even tho we have a pretty damn low effective corporate tax rate), would be reduced it would do little to the economy. [/FONT][/COLOR]
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How little would it do for the economy?
 
fmw said:
How little would it do for the economy?
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Very little? As in maybe close to zero?

The only way it would do any good is if it was spent. But the companies that own this money are already spending all they money that they feel the need to spend, so bringing it back wouldn't result in any more spending, or investment, or demand.
 
TheDemSocialist said:
Read more @: U.S. Companies Now Stashing $2 Trillion Overseas

If only the $2 trillion would trickle down! But hey even if our tax laws are reduced (even tho we have a pretty damn low effective corporate tax rate), would be reduced it would do little to the economy. [/FONT][/COLOR]
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HOw much of my companies money are you entitled to?

are rates are among the highest. higher than canada.

USA - In Photos: Global Corporate Tax Rates From Lowest To Highest - Forbes
 
TheDemSocialist said:
Uhhh: "most of that cash was used to fund dividend payouts and share buybacks rather than to boost investment." A Democratic congressional report indicated that the biggest companies receiving the benefits of $360 billion in repatriated funds actually cut a net 20,000 jobs, and that the holiday cost Treasury coffers $3.3 billion... Very little, then, went to hiring and reinvestment."
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Hah! Really, you don't seem to understand that dividend and share buybacks are payments on investments. These investors are large and small, American and not. Salaries and retirements are paid from the proceeds. That 3.3 billion you mention is as a direct result of globalization.
 
clownboy said:
Hah! Really, you don't seem to understand that dividend and share buybacks are payments on investments. These investors are large and small, American and not. Salaries and retirements are paid from the proceeds. That 3.3 billion you mention is as a direct result of globalization.
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Very little, then, went to hiring and reinvestment.
 
ReverendHellh0und said:
well when you manipulate the data and exclude the vast majority of corporations.......


"Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010, "


note the word "large".
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I'm sure that small corporations are cutting 20,000 jobs and hoarding millions offshores :roll:
 
ReverendHellh0und said:
well when you manipulate the data and exclude the vast majority of corporations.......


"Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010, "


note the word "large".


You can see that by just selecting "large", you get only a very small sample of corporate effective tax rates:

Statistics about Business Size (including Small Business) from the U.S. Census Bureau
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Most companies pay nothing in corporate income taxes, so I don't really know that adding in all corporations would really effect that percentage much, if anything, it would be lower.

Only C-corps pay corporate income tax, but they get other advantages in exchange. It's a trade off, and one that they voluntarily made.
 
TheDemSocialist said:
I'm sure that small corporations are cutting 20,000 jobs and hoarding millions offshores :roll:
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I have about 100 employees.... I won't tell you where I "hoard" the fruits of my enterprise. ;)


the question was corporate effective tax rate, you have to take all of it, not just the parts that help you.
 
imagep said:
Most companies pay nothing in corporate income taxes, so I don't really know that adding in all corporations would really effect that percentage much, if anything, it would be lower.

Only C-corps pay corporate income tax, but they get other advantages in exchange. It's a trade off, and one that they voluntarily made.
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It would make my forbes link the more accurate of the claims.
 
American said:
Don't worry, the new Congress may just fix that. :mrgreen:
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I hope you are correct. I am all for simplifying our tax code, getting rid of special tax deals, and lowering the rates.

Of course that might not make much difference to our macro-economy, it will help some businesses, and harm others, more or less balancing out.
 
ReverendHellh0und said:
the question was corporate effective tax rate, you have to take all of it, not just the parts that help you.
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The point being the effective tax rate is incredibly lower than the actual legal tax rate.
 
TheDemSocialist said:
The point being the effective tax rate is incredibly lower than the actual legal tax rate.
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But still much higher than you infered. (It's higher than canada!)


all companies should pay the same rate. cronie corporate capitalism gives bailouts, and breaks to the big guys at the expense of companies like mine. That's where your real problem is, not that I am handing the government 35% of my profits.
 
ReverendHellh0und said:
But still much higher than you infered. (It's higher than canada!)
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The actual rate corporations pay is much lower than what our laws state of 35-40%.

all companies should pay the same rate.
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I agree, and I agree it should be around 40%, and I agree there should be very little to no loopoholes.

That's where your real problem is, not that I am handing the government 35% of my profits.
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Whatever you say big guy
 
TheDemSocialist said:
The actual rate corporations pay is much lower than what our laws state of 35-40%.
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you've only shown this for about 1000 companies.

I agree, and I agree it should be around 40%, and I agree there should be very little to no loopoholes.
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I thin it should be 0% and all individuals should be taxed at 17%



Whatever you say big guy
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indeed, better dead than red.
 
TheDemSocialist said:
You might wanna check the EFFECTIVE corporate tax rate... ;)
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why....

why do i care if the effective rate is 15, 20, or 30 percent

the money was earned overseas....and in MOST cases taxes were paid to another country already on it

if the company were to bring it back here, uncle sammie has his hand out asking for approximately 1/3......

no thanks.....keep it overseas......invest it over there, and get me a return on it

now if it was free to repatriate, a lot of companies would bring some of it back.....use it for stock buybacks, dividends, and such here
 
TheDemSocialist said:
Read more @: U.S. Companies Now Stashing $2 Trillion Overseas

If only the $2 trillion would trickle down! But hey even if our tax laws are reduced (even tho we have a pretty damn low effective corporate tax rate), would be reduced it would do little to the economy. [/FONT][/COLOR]
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Spare us the BS on trickle down theory, only a handful of far right leaning economists still buy into that nonsense.

But to the real point of the article. I do not know where you get your numbers on corporate tax rate and effective corporate tax rate but according to the World Bank and International Finance Commission the US has the 2nd highest corporate tax rate and is in all categories above average in effective corporate tax rate. There may be some play in the math on how the US handles write-offs for depreciation schedules but that is not near enough to allow the ratings to fall that far. Overall, there is some real truth to the notion that our corporate tax rate is too high. Perhaps to the point that if lowered there would not be such need for so many different avenues to lower their effective tax rate.

I would offer your political contempt for corporate America has clouded your judgement on the real reason over $2 Trillion is parked offshore, and you can largely blame our horrible ineffective and bloated tax code for why all those dollars are somewhere else.
 
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