American corporations have huge amounts of money sitting overseas in order to avoid taxes. It is perfectly legal. Under the tax law, money earned through activities in another country is not taxed by the USA until the profits are brought back into the country. That means that if a company like Starbucks earns euros from selling coffee in Paris, those earnings are not taxed by the USA so long as Starbucks keeps them in abroad. Simply put, the tax law provides an incentive for American companies not to invest in the USA. After all, were Starbucks to take those French profits and use them to open their next store in Chicago, the company would have to pay 35% in taxes on the funds. It makes more sense to use the money to open a store in Singapore instead and thereby avoid the taxes.
For a long time, there has been a move to try to get this tax law changed. It makes no sense to discourage American companies from investing in their own country. The result of that law is to reduce economic growth and reduce jobs in the USA. For some reason, president Obama has opposed making this change. Today, we got a report that makes clear why this is.
The news of the day is that by far the biggest beneficiary of the current tax law is General Electric. GE has roughly $110 billion dollars in foreign deposits that would be taxed were they brought into the USA. We knew that GE avoided taxes; last year GE earned 14 billion dollars but paid no American taxes. Now we know that GE has been using this dodge for long enough to amass a pile of cash bigger than the gross national product of many developing nations.
Of all of corporate America, GE has been the strongest supporter of president Obama. During Obama's campaigns, GE had its NBC and MSNBC networks acting as cheerleaders for Obama. Is it any wonder that Obama now takes positions that benefit GE even though they cost jobs and economic growth for the country?
For a long time, there has been a move to try to get this tax law changed. It makes no sense to discourage American companies from investing in their own country. The result of that law is to reduce economic growth and reduce jobs in the USA. For some reason, president Obama has opposed making this change. Today, we got a report that makes clear why this is.
The news of the day is that by far the biggest beneficiary of the current tax law is General Electric. GE has roughly $110 billion dollars in foreign deposits that would be taxed were they brought into the USA. We knew that GE avoided taxes; last year GE earned 14 billion dollars but paid no American taxes. Now we know that GE has been using this dodge for long enough to amass a pile of cash bigger than the gross national product of many developing nations.
Of all of corporate America, GE has been the strongest supporter of president Obama. During Obama's campaigns, GE had its NBC and MSNBC networks acting as cheerleaders for Obama. Is it any wonder that Obama now takes positions that benefit GE even though they cost jobs and economic growth for the country?
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