Why Companies Are Keeping Record Levels of Cash in Tax Havens
It seems like every day the pundits are talking about how businesses
aren't growing and hiring. New
information has surfaced that makes it more clear that this is because of bad
economic policies.
In Corporate America's overseas cash pile rises to $947 Billion, Richard Waters says, "American companies have stockpiled nearly a trillion dollars of cash offshore to avoid paying higher tax bills at home, according to an analysis released on Monday."
Evidently Moody's Investors Service recently reported " . . . cash reserves of U.S. companies climbed to $1.64 last year" which is ". . . 12% more than the year before," while at the same time, " . . . foreign holdings, which reached $947 Billion last year, up 13% from 2012 . . ." increased by approximately the same percentage.
Even though Federal Reserve policies have created an environment (at least temporarily) that should encourage growth and expansion, corporate America is proving unwilling to invest, choosing to hoard massive amounts of money in tax havens overseas instead.
I suspect it is because businesses know we are due for a stock market correction and want enough cash on hand to make it through tough times. The Fed can't keep interest rates low forever... There is also the possibility of fallout from the student loan bubble bursting.
According to the Caterpillar hearing morphs into a tax-code debate, a Senate committee meeting yesterday "was scheduled to focus on heavy machinery giant Caterpillar's avoidance of $2.4 billion in U.S. taxes by shifting profits to a wholly owned Swiss subsidiary." However, it became a discussion on the U.S. tax code and foreign competitiveness.
For about five hours, Carl Levin "grilled" Caterpillar executives, but Caterpillar and PricewaterhouseCoopers execs " . . . said the change aligned machinery-parts management with the manufacturer's growing international business."
Caterpillar Vice President of finance services division said ". . . the company pays an effective tax rate that averages about 29%, higher than at some U.S. firms."
The article concludes by saying "Sen. Rand Paul, R-Ky., went further, arguing that the subcommittee should give Caterpillar an American business award 'instead of vilifying people for legal behavior.'"
In Corporate America's overseas cash pile rises to $947 Billion, Richard Waters says, "American companies have stockpiled nearly a trillion dollars of cash offshore to avoid paying higher tax bills at home, according to an analysis released on Monday."
Evidently Moody's Investors Service recently reported " . . . cash reserves of U.S. companies climbed to $1.64 last year" which is ". . . 12% more than the year before," while at the same time, " . . . foreign holdings, which reached $947 Billion last year, up 13% from 2012 . . ." increased by approximately the same percentage.
Even though Federal Reserve policies have created an environment (at least temporarily) that should encourage growth and expansion, corporate America is proving unwilling to invest, choosing to hoard massive amounts of money in tax havens overseas instead.
I suspect it is because businesses know we are due for a stock market correction and want enough cash on hand to make it through tough times. The Fed can't keep interest rates low forever... There is also the possibility of fallout from the student loan bubble bursting.
According to the Caterpillar hearing morphs into a tax-code debate, a Senate committee meeting yesterday "was scheduled to focus on heavy machinery giant Caterpillar's avoidance of $2.4 billion in U.S. taxes by shifting profits to a wholly owned Swiss subsidiary." However, it became a discussion on the U.S. tax code and foreign competitiveness.
For about five hours, Carl Levin "grilled" Caterpillar executives, but Caterpillar and PricewaterhouseCoopers execs " . . . said the change aligned machinery-parts management with the manufacturer's growing international business."
Caterpillar Vice President of finance services division said ". . . the company pays an effective tax rate that averages about 29%, higher than at some U.S. firms."
The article concludes by saying "Sen. Rand Paul, R-Ky., went further, arguing that the subcommittee should give Caterpillar an American business award 'instead of vilifying people for legal behavior.'"
No comments:
Post a Comment