Thursday, May 1, 2014

Corporate giants stash trillions abroad.

by Richard Mellor
Afscme Local 444, retired

Corporate America did well last year, so well, US corporations added $206 billion to their offshore stash of profits.  These companies now have a total of $1.95 trillion parked in offshore accounts.  It’s easy for these companies, those like Apple and Microsoft, to use the location of their foreign subsidiaries as sources of their intellectual property like patents for example.

BusinessWeek reported last month that Apple and Microsoft alone accounted for $37 billion (18.2%) of last year’s offshore increase adding that in the last three years alone, Apple’s profits stashed abroad have quadrupled, Microsoft’s tripled while Google’s grew 100% to $38.9 billion from $17.5 billion.

Multinationals earned 43% of their overseas profits in 2008 in Bermuda, Ireland, Luxembourg the Netherlands and Switzerland.  BW reports that this is “more than five times the share of workers and investments they have in these countries.”

That’s internationalism for you. The capitalist class wants borders for people, encourages nationalist thinking and the fear of foreigners but no obstacles for capital.   The source of most of this cash that Apple and Microsoft has abroad is Chinese, Vietnamese and other workers in Asia, but the likes of Tim Cook or Bill Gates aren’t planning on improving the rights and material well-being of the workers in Vietnam or at FoxConn in China any more than they are ours.  It is these conditions that are necessary for the profits to keep flowing in to these corporations and the pockets of their investors.

The politicians in Congress who represent the interests of these corporations are a bit peeved as there is considerable discontent among different sections of the 1% over tax rates. This sort of war was going on between the old established bourgeois and these new coupon clippers in private equity who are not subject to the rules of the exchanges and whose profits can be taxed at a much lower rate.  The state (or government as working people more often refer to it) is as Marx pointed out, the executive committee for the capitalist class as a whole, looks after their collective interests and safeguards the system. This offshore cash means anywhere form $30 billion to $90 billion in lost tax revenue and they need it.

Apple's Cook, paid 378 million in one year.
There’s a move afoot to lower the corporate tax rate in the US and make changes to the way foreign income is taxed to entice these exploitative bastards to bring the money back to the US.The idea is to lower the US corporate tax rate to 25% from 35% (Obama wants to lower it to 28%).  These profits held abroad pay no US taxes. The idea is to impose a one-time tax on profits already accumulated by these guys and change the tax code to make it easier for them to move the money back and at the same time change the laws to make it harder for them to move money abroad.  Foreign income would still be exempt from US taxes so they can go their merry way as before.

Revenue raised from the one-time tax on already accumulated profits would be used to replenish the Highway Trust Fund which finances highway construction and mass transit as well as clean up of the energy industry’s leaky storage tanks. The Highway Trust Fund is insolvent or close to it and we all know that our social infrastructure is falling apart. Business Week once referred to the cost needed to bring our infrastructure up to date as the “Third Deficit”. The capitalist class does need infrastructure for the system to support profit making.  Homeless people are acceptable but business must go on.

No matter what the politicians of the 1% do, these giant corporations that have more money than the national treasuries of most countries will have nothing to fear from legislation introduced by the people they bribe to make the laws and from political parties they finance.

They only fear workers, our organizations, our political parties, our independence from them and their institutions------ our revolutionary potential.

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