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Monday, November 25, 2013

American Companies Keep Stockpiles of 'Foreign' Cash in U.S. Defying I.R.S. Tax Laws (This Is Actually A Threat To National Security!!)

American Companies Keep
Stockpiles of 'Foreign' Cash in U.S.
Defying I.R.S. Tax Laws

This Is Actually A Threat To National Security!!

There's a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas: A lot of it is actually sitting right here at home.

Some companies, including Internet giant Google Inc., software maker Microsoft Corp. and data-storage specialist EMC Corp., keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, according to people familiar with the companies' cash positions.

In the eyes of the law, the Internal Revenue Service and company executives, however, this money is overseas. As long as it doesn't flow back to the U.S. parent company, the U.S. doesn't tax it. And as long as it sits in U.S. bank accounts or in U.S. Treasurys, it is safer than if it were plowed into potentially risky foreign investments.

In accounting terms, the location of the funds may be just a technicality. But for people on both sides of the contentious debate over corporate-tax reform, the situation highlights what they see as the absurdity of rules that encourage companies to engage in semantic games, legal gymnastics and inefficient corporate-financing methods to shield profits from U.S. taxes.

The cash piling up at the nation's biggest corporations will get renewed attention in the weeks ahead, as companies report their fourth quarter and 2012 earnings. Tuesday's reports included updates from Google, which saw its stockpile of cash increase to $48.1 billion from $44.6 billion a year earlier, as well as results from Johnson & Johnson and DuPont Co.

The fact that much of the money already is in the U.S. also undermines a central argument made by companies seeking tax relief to bring home money they have earned abroad, tax experts and lawmakers say: That the cash is languishing overseas when it could be invested to the benefit of the U.S. economy.

Edward Kleinbard, a professor at the University of Southern California's Gould School of Law and a former chief of staff for Congress's Joint Committee on Taxation, said there is a misperception that companies' excess cash is inaccessible, "somehow held in gold coins and guarded by Rumpelstiltskin."

"If it is a U.S.-dollar asset, that means ultimately it is in the U.S. economy in some fashion," he adds. "Where it is not is in the hands of the firm's shareholders."

The U.S. is the only major economy whose tax authorities claim a share of a domestic company's profits no matter where those profits are earned. But auditors don't require the companies to account for possible taxes on foreign earnings as long as they declare that the funds are permanently invested overseas. The upshot: American companies have a strong incentive to find ways of earning most of their profit overseas and keeping it in the hands of foreign units.

Recently the Securities and Exchange Commission has pressed companies to disclose how much tax they would owe if those funds were transferred to the U.S. parent. The idea is to give shareholders a better picture of how much cash would be available if the funds were repatriated.

U.S. companies are lobbying Congress to replace the current corporate-tax system with one that would tax only their domestic profits. Barring that, some say they would accept a tax on their repatriated earnings that is below the country's current corporate-tax rate of 35% so they could use the funds to pay dividends, buy back shares or otherwise put it to work in the U.S.

Out of EMC's $10.6 billion in cash holdings at the end of September, $5.1 billion was held overseas, according to its regulatory filings. Physically, however, more than 75% of these foreign earnings were stashed in the U.S. or in U.S. investments, according to a 2011 Senate report, whose figures the company confirmed.

"One of the major reasons that U.S. companies' foreign subsidiaries reinvest earnings in U.S.-dollar-denominated investments is to avoid gains and losses from changes in foreign-exchange rates," EMC spokeswoman Lesley Ogrodnick wrote in an emailed response to questions about the company's cash holdings.

EMC isn't alone. About 93% of the $58 billion in cash held by Microsoft's foreign subsidiaries is invested in U.S. government bonds, U.S. corporate bonds and U.S. mortgage-based securities, according to SEC filings. Most of that is in accounts in the U.S., according to a person familiar with the matter. In total, Microsoft had a cash stockpile of $66.6 billion, according to its filings.

The funds held by Microsoft's foreign subsidiaries are "deemed to be permanently reinvested in foreign jurisdictions," the company said in its filings. "We currently do not intend nor foresee a need to repatriate these funds."

Most of the $29.1 billion in cash and investments that Google said in an October securities filing that it plans to "permanently reinvest" outside the country is held in accounts or investments in the U.S. The same is true for most of the foreign earnings of software maker Oracle Corp., according to the Senate report.

"If you are a U.S. company, you would have a bias to leave it in dollars, rather than taking the foreign-exchange exposure," said Fredric G. Reynolds, the former chief financial officer of CBS Corp. "No CFO wants to miss" an earnings estimate "because you happened to take a foreign-exchange hit," he said.

Sizable U.S.-dollar accounts are often owned by U.S. companies' foreign subsidiaries in tax havens like Ireland, the Cayman Islands and Singapore. But the accounts ultimately are U.S. accounts, regardless of where they are opened; a foreign bank typically will hold dollar deposits in a so-called correspondent bank in the U.S.

"The balances are in the U.S., but they are controlled from outside the U.S.," said Thomas Deas, vice president and treasurer of Philadelphia-based chemical producer FMC Corp. and chairman of the National Association of Corporate Treasurers.

Auditors and the SEC expect companies to account for a possible tax hit if there is any risk their subsidiaries might one day pay funds from foreign earnings to the U.S. parent. Few companies provide for that possibility, however.

Getting around it is simple: a company officer, typically the CFO or the treasurer, declares to the company's auditors that the funds have been permanently or indefinitely invested overseas. Auditors generally won't challenge the declaration, financial experts say, as long as a company's behavior is consistent and it doesn't repeatedly repatriate funds earmarked for foreign investments.

There is little reason not to formally commit funds overseas. Foreign markets offer the best growth prospects for many U.S. companies, and the funds may be needed there to build factories, develop new products or make acquisitions. Plus, the designation can be changed in an instant if the company is prepared to accept the tax bite. United Technologies Corp., for instance, used $4 billion of such "permanently" reinvested funds held by foreign subsidiaries to help pay for last year's acquisition of Goodrich Corp.

Companies say the U.S. corporate tax rate is so high that it doesn't make financial sense to bring more cash back than necessary. Even if much of the money already is here and available to be lent out by U.S. banks, companies argue that it isn't available to them to use as they please, such as distributing it to shareholders through dividends and buybacks.

Many executives still hold out hope for a broad overhaul of the corporate tax code. If lawmakers do take up the matter, figuring out how to collect taxes on earnings accumulated outside of the U.S. is expected to be front and center. The challenge would be in devising a system that raises revenue by setting the rate low enough that companies opt to pay the tax rather than continue to pile up an estimated $300 billion a year beyond Uncle Sam's reach.

The Senate's Permanent Subcommittee on Investigations looked into the issue in 2011 and concluded a temporary tax break on foreign earnings wasn't warranted. "The presence of those funds in the U.S. undermines the argument that undistributed accumulated foreign earnings are 'trapped' abroad," the committee said in its report.

Even so, the repatriation issue has distorted companies' capital structures, said Alan Shepard, an analyst at Madison Investment Advisors, which manages about $16 billion in assets. In some cases companies could lower their debt if they repatriated their cash, but don't because of the tax consequences, he said. "And the money is effectively just across the street here in the U.S."

Oracle derives about half of its revenue from the U.S. but keeps more than three-quarters of its cash and short-term investments—or $26 billion—in the hands of its foreign subsidiaries.

During its 2012 fiscal year, the company said it "increased the number of foreign subsidiaries in countries with lower statutory rates than the rate used in the United States, the earnings of which we consider to be indefinitely reinvested outside the United States."

If those funds were brought home and subject to U.S. income tax, Oracle estimated it could owe about $6.3 billion at the end of its fiscal year in May.

Low interest rates at home have allowed U.S. companies to borrow cheaply, helping them avoid tapping their foreign-held cash. Late last year Oracle raised $5 billion in its first debt sale in two years. It is paying an interest rate roughly two-thirds of a percentage point above Treasurys for the 10-year bonds, about 2.5% at the time. The company said the proceeds could be used to buy back stock, repay debt or pay for acquisitions.

Large U.S. companies boosted their offshore earnings by 15 percent last year to a record $1.9 trillion, avoiding hefty tax bills by keeping the profits abroad, according to a new report.

The overseas earnings stockpile has climbed by 70 percent over the past five years, said research firm Audit Analytics. Data in its report covers the Russell 3000 index of the largest U.S. corporations.

U.S.-based multinationals do not have to pay U.S. corporate income tax on foreign earnings as long as the earnings do not enter the United States. Accounting rules also let the companies avoid recognizing a tax expense if management intends to keep the earnings indefinitely reinvested overseas.

"It would probably be nice to have this money in our country being used in our economy, but at the moment we see it growing elsewhere," said Don Whalen, general counsel and director of research at Audit Analytics.

Conglomerate General Electric Co , had the most indefinitely reinvested overseas earnings, at about $108 billion, while drugmaker Pfizer Inc was next with $73 billion, according to Audit Analytics.

Businesses have been lobbying Congress for a new law that would let them bring foreign profits home on a regular basis with little or no tax due, or for a one-time "tax holiday" on foreign earnings.

Most Democrats oppose a tax holiday on overseas profits, citing studies showing that a tax holiday enacted under former President George W. Bush did bring profits into the country, but that money was not widely used for hiring or capital investment.

Some tax activists have argued for repealing the tax deferral law that lets corporations park profits offshore tax-free, though this proposal has made little political headway.

Some companies have been borrowing money in the U.S. bond market rather bring their overseas earnings home.

Computer giant Apple Inc last week raised $17 billion in a record U.S. bond sale to help fund its plan to return money to its shareholders. The bond sale let Apple avoid taxes that would have been due if it had used some of its $102 billion in foreign cash instead.

Microsoft Corp , the world's largest software company, sold $2.7 billion in the bond market last month. It has about $74 billion of cash and short-term investments, but most of that is held outside the United States.

The largest U.S.-based companies expanded their untaxed offshore stockpiles by $183 billion in the past year, increasing such holdings by 14.4 percent, according to data compiled by Bloomberg.

Microsoft Corp. , Apple Inc. and Google Inc. each added to their non-U.S. holdings by more than 34 percent as they reaped the benefits of past maneuvers to earn and park profits in low- tax countries. Combined, those three companies alone plan to keep $134.5 billion outside the U.S. government’s reach, more than double the $59.3 billion they held two years earlier.

The build-up of offshore profits -- totaling $1.46 trillion for the 83 companies examined -- is increasing because of incentives in the U.S. tax code for booking profits offshore and leaving them there. The stockpiles complicate attempts to overhaul the tax system as lawmakers look for ways to bring the money home and discourage profit shifting.

Profit Shifting

This Costs The Federal Government $50 Billion Per Year!!!!

Profits characterized as overseas for accounting purposes may be little different economically from any other profits, but because of a provision known as deferral, explained in the next section, these profits can accumulate for years, sometimes indefinitely, without being taxed. According to Joint Committee on Taxation estimates, this costs the federal government $50 billion per year, and this cost is growing over time as corporations find ever more creative ways to make their U.S. profits look like offshore income. The problem with these accumulated corporate profits is not that they are “offshore”—it is that they are untaxed. This problem is real and serious.

Offshore income, for tax purposes, is income controlled by a foreign subsidiary that is not immediately returned to the U.S. parent corporation. In some cases, the income associated with a foreign subsidiary is derived from the sales and operations conducted in the subsidiary’s jurisdiction, and is reinvested by the subsidiary in activities in its own jurisdiction—that is, the foreign income is from real economic activity in a foreign country. But companies are increasingly able to use accounting games to shift profits overseas for tax purposes, even when the profits really stem from activities taking place in the United States.

This can be done in many ways, but here is one example. A company whose profits are largely driven by intellectual property—patents and copyrights—can fairly simply make most of its profits appear to be from subsidiaries in low-tax jurisdictions. Imagine a U.S. corporation with research and development labs in California, churning out new technology that is then sold primarily to a U.S. market. The U.S. corporation establishes a subsidiary in a tax-haven country. The parent corporation then sells its patents and copyrights—the fruits of its U.S. R&D, and the source of all of its profits—to the wholly owned subsidiary in a low-tax jurisdiction, for a very low price. The subsidiary now owns the intellectual property and can charge royalties to the parent company in the United States, at very high rates, when the parent company wants to manufacture and sell the patented item. The royalty payments made by the U.S. parent company are considered costs to the U.S. parent and income to the foreign subsidiary.

Suddenly, the little wholly owned subsidiary in Luxembourg is one of the most profitable companies on earth, while the U.S. parent company is barely meeting expenses. Profits driven by R&D, manufacturing, and even sales in the United States are now considered foreign income for tax purposes and benefit from deferral. By paying outrageous prices to rent back its own intellectual property from its own controlled subsidiary, the U.S. parent company has just stripped its U.S. profits into a tax-haven country and avoided paying U.S. corporate income taxes, without any change to the real-world structure of its business. The total pre-tax income of the multinational as a whole stays the same, all of the real activity—jobs, sales, manufacturing activities—stays the same, but the tax bill declines.

If bank accounts do not provide a high enough return, foreign subsidiaries of American corporations can use their unrepatriated income to purchase U.S. Treasury bonds or invest in the U.S. stock market, as long as the investments are in unrelated corporations. Apple can use unrepatriated profits to buy General Electric stock, and General Electric can buy Apple’s corporate bonds, all without “returning the money to the United States.”

The drive to keep profits “offshore” for tax purposes may limit a parent corporation’s investment options somewhat, but domestic businesses and consumers still have access to multinational corporations’ foreign earnings. This money is not “offshore” economically, and it is not idle—it is already circulating in the American economy, being used for investments in American businesses and families.

Large Multinationals Can Leverage Their ‘Offshore’ Income To Do Almost Anything

If companies can instruct their foreign subsidiaries to invest profits in U.S. banks, bonds, and stocks without repatriating the profits and triggering corporate tax, what can offshore profits not be used for? In theory, they cannot be used to invest in the U.S. parent corporation’s U.S. operations, and they cannot be used to pay shareholders through dividends or stock buybacks. But in practice, corporations with large stashes of unrepatriated earnings can leverage those earnings for almost anything, through the power of borrowing.

While rules exist that prevent corporations from using offshore income as direct collateral for bonds issued in the United States, those foreign earnings drive down the interest payments that potential bond buyers demand in exchange for capital, allowing corporations to access cash at very low cost without repatriating untaxed earnings. Companies with large pools of unrepatriated earnings have favorable leverage and cash positions as a result of their unused cash. Those attributes result in high credit ratings and low—or sometimes even negative—borrowing costs. A company with $100 billion in cash on hand is a pretty low-risk borrower.

A corporation with lots of unrepatriated earnings does not have to repatriate those earnings to engage in domestic investment or payouts to shareholders. It can just borrow money for its domestic activities, and this borrowing is almost costless because creditors know that the unrepatriated earnings can be tapped at any time.

Apple has given us a great example of how this works. In April, the company announced that it wanted to begin a $60 billion share buyback program. The only problem? “According to analyst estimates, Apple has $145 billion of cash – but only $45 billion on hand in the US, and thus not enough to fully fund the share buy-back program,” Reuters reported. In theory, share buybacks and dividends are exactly what corporations cannot do with unrepatriated income. In practice, however, Apple was easily able to fund its buyback program without paying a dime of tax.

In April, Apple issued $17 billion in corporate bonds—the largest bond offering in American corporate history. The interest rate Apple paid on 10-year bonds was only 2.415 percent, or only 74 basis points above the rate on 10-year Treasury bonds that day. But that is just the sticker price. In fact, the interest on the bonds is then tax deductible—at a 35 percent corporate tax rate, the business-interest deduction covers 84.5 basis points of the borrowing costs, lowering the after-tax interest costs to 1.57 percent, or 10 basis points lower than Treasuries. With expected inflation above this level, Uncle Sam and bond buyers actually paid Apple to hold onto their money for 10 years.

The deferral of taxes on overseas income is one of the most expensive tax expenditures in the corporate tax code. It also creates an incentive at the margin to move real economic activity—jobs and assets—to low-tax jurisdictions. Unlike “trapped profits,” these are real problems worth addressing. One potential solution is to simply repeal deferral—taxing all profits in the same way, whether they are booked in Iowa or Ireland, would increase corporate tax revenues, reduce the incentive to move jobs and assets to low-tax jurisdictions, and and put a stop to unproductive profit-shifting games.

“The corporate system is broken and it’s broken primarily because of international,” said Edward Kleinbard, a tax law professor at the University of Southern California.

The ability to defer U.S. taxes until profits are brought home, the ease of shifting profits to low-tax countries and the world’s highest statutory corporate rate have all contributed to the growing stockpiles outside the U.S.

A report last year by analysts at JPMorgan Chase & Co (JPM). estimated that all U.S.-based companies had $1.7 trillion in accumulated offshore profits. In the data compiled by Bloomberg, 83 companies had about 75 percent of last year’s total, which suggests that the total for all companies now exceeds $1.9 trillion.

$108 Billion

General Electric Co (GE). again leads all U.S. companies with $108 billion held offshore, up from $102 billion a year earlier. Pfizer Inc. is second with $73 billion, followed by Microsoft, Merck & Co., Johnson & Johnson (JNJ) and International Business Machines Corp. The data comes from companies’ annual regulatory filings.

Eleven companies, including Apple, Cisco Systems Inc. (CSCO) and Citigroup Inc., have at least $40 billion in profits reinvested overseas, up from six companies that had crossed that mark last year and three the year before that.

The data compiled by Bloomberg examined 83 U.S.-based companies that each reported holding more than $4 billion in earnings outside the country indefinitely in one of the past two years.

Foreign Parents

It excluded companies such as Eaton Corp. that now have foreign parents, and it also excluded United Technologies Corp (UTX)., which disclosed a $22 billion balance this year and hadn’t reported the numbers before then.

The analysis relies on the most recent filings for the companies. Those with fiscal years that end Dec. 31 filed their 10-Ks over the past few weeks.
Apple, whose stock has fallen 38.7 percent from its Sept. 19 closing high of $702.10, has been under pressure to return cash to investors in the form a dividend or buyback. Chief Executive Officer Tim Cook has said the money isn’t burning a hole in the company’s pockets and that it’s considering different strategies to reward investors with a new payout.

A reason for the overseas cash growth can be linked in part to Apple’s performance. Sales in Asia, Europe and Australia rose 43.7 percent to $80.2 billion in fiscal 2012. Unlike most other U.S.-based companies, Apple has already taken accounting charges for eventual taxes on some of its unrepatriated foreign holdings and reports an associated deferred tax liability of $14.7 billion.

Cash Holdings

The company’s permanently reinvested overseas earnings were $40.4 billion while its foreign cash holdings were $82.6 billion, as of Sept. 29, 2012.
Steve Dowling, a spokesman for Apple, declined to comment.

The Securities and Exchange Commission has asked some companies, including Google, to assert that they have enough liquidity in the U.S. to justify their contention that the offshore money will stay overseas indefinitely.
Google wrote in its annual filing that $31.4 billion, or 65.3 percent, of its liquid holdings were outside the U.S.

“Our current plans do not demonstrate a need to repatriate them to fund our U.S. operations,” the filing said.

Niki Fenwick, a spokeswoman for Google, declined to comment.
Twelve of the 83 companies in the analysis reduced their offshore holdings from the previous year’s level, including Exxon Mobil Corp (XOM)., Las Vegas Sands Corp (LVS). and General Motors Co (GM).

Vegas Sands

Las Vegas Sands in 2012, according to its filing, repatriated $1.37 billion tax-free because it had enough foreign tax credits. The company said it would consider future foreign earnings not to be indefinitely reinvested, and its total accumulated earnings declined to $4.3 billion from $5.6 billion the year before.

Exxon Mobil’s holdings declined to $43 billion from $47 billion, in part because of a restructuring of its operations in Japan.

The U.S. operates what is known as a worldwide tax system, which means the country applies its 35 percent corporate tax rate to profits that U.S.-based companies earn around the world. Most other industrialized nations impose minimal taxes, if any, on their companies’ foreign earnings.

Tax Credits

U.S. companies receive foreign tax credits for payments to other countries, meaning that they can bring home previously taxed earnings with little residual tax owed to the U.S. They also can defer the U.S. tax until they bring the profits home.

“If you lowered the corporate tax rate, some of these problems, they don’t go away, but they’re reduced,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, a Washington-based group that promotes policies favoring technological innovation. The group’s board includes executives from Microsoft, Apple, Cisco and Intel Corp (INTC).
In their annual regulatory filings, companies are required to report foreign profits that haven’t been repatriated and for which they haven’t provided for U.S. taxes.

The balances aren’t necessarily held in cash and may never realistically be subject to U.S. taxes, particularly if invested in physical assets in high-taxed foreign countries, said Susan Morse, a tax law professor at the University of California, Hastings.

“In many cases, it really is permanently reinvested and it’s not an earnings management game,” she said.

A 2011 report by Senator Carl Levin, a Michigan Democrat, found that 46 percent of offshore assets held by a subset of 27 companies was invested in U.S. banks or assets, suggesting that it does flow to some extent through the U.S. economy.

Intangible Assets

The incentive to accumulate overseas profits in cash is acute for technology and pharmaceutical companies that generate income from intangible assets such as patents. They can sell the patents to their foreign subsidiaries and then shift them to low-tax jurisdictions and book the profits there.
“They’re using the law to their advantage, as all companies do,” Atkinson said. “And it’s easier to do that with intangible income.”

That pattern is evident from the filings of the minority of companies that disclose how much they would have to pay if they brought their offshore profits home.

Microsoft, for example, reported that it would owe $19.4 billion if it repatriated its $60.8 billion in offshore holdings. That 31.9 percent rate indicates that Microsoft has paid as little as 3.1 percent in foreign taxes, or somewhat more if the $19.4 billion includes state taxes and foreign withholding taxes.

‘Outdated’ System

In testimony before a Senate subcommittee last year, Bill Sample, Microsoft’s corporate vice president for worldwide tax, said the U.S. tax system is “outdated,” uncompetitive and provides disincentives for U.S. investment.

“Microsoft’s tax results follow from its business, which is fundamentally a global business that requires us to operate in foreign markets in order to compete and grow,” he said. “In conducting our business at home and abroad, we abide by U.S. and foreign tax laws as written.”

Citigroup reported that it would owe $11.5 billion if it repatriated its $42.6 billion, suggesting a foreign tax rate as low as 8 percent.

‘Know How’

“More companies know how to do it,” said Kleinbard, a former chief of staff of the congressional Joint Committee on Taxation who said international tax-avoidance techniques are spreading. “They’ve learned the technologies from the innovative leaders, the tax technology leaders.”

U.S. lawmakers are examining changes to international taxation as part of a tax-code rewrite that would have to address the built-up earnings in a transition to a new system.

Senators Ron Wyden, an Oregon Democrat, and Rob Portman, an Ohio Republican, said last month that they saw room for an international system that would lower the U.S. tax rate, let companies bring home new profits mostly tax-free and limit companies’ ability to move profits out of the U.S.

That would mirror the proposals offered by Senator Mike Enzi, a Wyoming Republican, and Representative Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee.

Camp’s proposal would impose a 5.25 percent tax on the accumulated earnings, whether repatriated or not, payable over eight years.

That plan, released in 2011, will eventually be part of a tax code overhaul that Camp plans to push through his committee this year. Meanwhile, the offshore stockpiles keep expanding.

“It is definitely symptomatic,” Morse said, “of companies’ incentive to keep offshore profits offshore.”


In response to persistent criticism about a policy that requires it to keep billions of dollars in offshore bank accounts, the General Electric Company held a press conference on the deck of one of its aircraft carriers here yesterday to clear the air. “It was never our intention to avoid paying corporate income taxes,” said GE CEO Jeffrey R. Immelt. “We understand that our policy on overseas profit lent itself to misinterpretation, and for that we apologize. Mark my words: nothing like this will ever happen at GE again.

“What are we going to do, dump it all in…the…ocean?” added a suddenly pensive Immelt, as if he had said too much.

“We know that keeping our profits offshore have cost Uncle Sam a ton of money,” said the CEO. “Rest assured, we are currently working on a plan to repatriate our cash,” he added, as he attempted to furtively shove an actual metric ton of $100 bills into the murky depths.

Other high-level executives at the company commented on GE’s plans for moving its overseas profits. “Hey, every giant multinational corporation makes mistakes, and it’s my job to fix them,” said Daniel Murphy, senior vice president of hydrocurrency research. “The efforts of the entire aquatics-lamination division are being brought to bear on this important problem.” Murphy was previously a professor of advanced materials at Ithaca College, where he won a Nobel Prize for an innovative gel-coating technique for waterproofing paper.

Krav the Shark-Repeller, the newest member of GE’s marine entertainment department, was also made available at the press conference. “Krav know how to distract fish with teeths. No animal ever bite Krav, not in 34 years GE traveling circus. Krav make sure no shark eat giant GE money-ball.”

Immelt, the chairman of President Obama’s Council on Jobs and Competitiveness, spoke again at the close of the press conference. “Do you really think a company kind enough to give a job to a down-on-his-luck circus performer would knowingly bilk the very country that bailed it out less than five years ago? Think about that for a second,” he said, before turning to fill another buoy with shark-repelling urine.

When reached for comment, GE CFO Keith Sherin returned to offering a blood sacrifice to the 30-foot Poseidon statue that now adorns the lobby of the company’s corporate headquarters.

Why President Obama’s Corporate Tax Proposal Isn’t A Giveaway On Offshore Profits

On Tuesday, the president outlined a plan to overhaul the corporate tax code and use short-term revenue increases to pay for investments that put the American middle class back to work. Some have characterized his plan as a “repatriation holiday”: a one-time tax break on offshored income to bring it home. But that is not in fact what his plan entails.

Under a repatriation holiday, corporations are given a big tax break on their current stockpiles of untaxed overseas income in the hope that they will then invest more money in the United States. The U.S. tried this in 2004, granting a “one-time only” tax rate of 5.25 percent as long as corporations brought their untaxed profits back to the country within the year. Corporations did take advantage of the extremely low tax rate, getting an enormous break on $300 billion in previously untaxed profits and giving the federal government a temporary revenue boost in the first year in exchange for a big revenue loss overall. Unfortunately, those corporations used 92 percent of that money to make payouts to wealthy shareholders while laying off thousands of employees over the next few years. It ended up having no appreciable effect on economic growth and costing the federal government billions in forgone taxes. Repeating such a holiday would indeed be a terrible mistake.

Yet that is not what the president has put forward. His proposal does not necessarily have anything to do with unrepatriated profits or tax breaks for bringing them back home. Many of the major reforms to the corporate tax code that are being discussed, including changes in the way that corporations pay tax on international income, tend to raise more revenue immediately after they are enacted than in later years. But they also curtail tax expenditures and raise revenue long in the future.

Gene Sperling, director of the National Economic Council, made that clear on Tuesday when he said, “This is not…a repatriation tax of any kind… In any corporate tax reform that’s been done in other countries or any proposal that you see currently, there is one-time revenue.” That extra boost is the “one-time revenue” that the president wants to spend on jobs.

So where does the one-time revenue come from? Take, for example, reforming deferral. Currently, American corporations are allowed to put off paying taxes, sometimes indefinitely, on profits that are earned abroad or controlled by foreign subsidiaries. Reforming or repealing this provision — in other words, taxing all profits immediately at either the full corporate rate or a slightly lower one — would raise substantial revenue, but a disproportionate share of the new revenue would come in the first few years. First, the reform would tax the big backlog of profits that have already been earned immediately, all in one year, creating a one-time bump in revenue. Then new profits would be taxed as soon as they are earned, creating a stream of increased revenue. Eventually the initial boost would be exhausted, leaving a steady source of revenue going forward that may be larger than under the current code but smaller than the upfront increase. Reforms to things like accelerated depreciation (which lets firms deduct the cost of equipment faster than that equipment actually wears out) or accounting techniques known as Last In First Out have similar effects.

None of these are “one-time holidays” or timing gimmicks. They raise revenue, but they do it unevenly over time. The gimmick would be treating these first few years as though they will last forever and cutting corporate rates accordingly. Reforming corporate tax breaks and spending all of the resulting revenue, including the temporary bump, on a lower tax rate that lasts forever would blow a hole in the budget after the initial revenue disappears.

This is why it is so important that the president has made clear that any “revenue-neutral” corporate tax reform must be judged on the money that will come in the second ten years after enactment, not just on initial increases.
Some commenters have added to the confusion around the president’s proposal by focusing on so-called “transition fees.” In any big change to the way offshore profits are handled by the code, there will be rules for what happens to profits earned under the current system but not yet taxed. Some of these rules can create immediate, short-lived revenue increases and losses later on, but they are not the focus of the proposal. In fact, the White House fact sheet on corporate reform does not include any specific proposal for transition fees.

The president is proposing, as he has before, that corporate tax reform should be revenue neutral in the long run. This means that there will be some temporary revenue in the first few years that can be used to pay for critical investments to get our economy back on track. But it has nothing to do with repatriation holidays or other gimmicks. It is a natural result of major changes to the corporate tax code.

Monty Henry, Owner

NOW, look in on your home, second home, lake house or office anytime, anywhere from any internet connected PC/Lap-top or Internet active cell phone, including iphone or PDA.

Watch your child's caregiver while sitting at a traffic light or lunch meeting, or check on your business security from the other side of the world. Our built-in hidden video features all digital transmissions providing a crystal clear image with zero interference. With the IP receiver stream your video over the internet through your router, and view on either a PC or smart phone. Designed exclusively for DPL-Surveillance-Equipment, these IP hidden wireless cameras come with multiple features to make the user's experience hassle-free.

NOW, look in on your home, second home, lake house or office anytime, anywhere from any internet connected PC/Lap-top or Internet active cell phone, including iphone or PDA: http://www.dpl-surveillance-equipment.com/wireless_hidden_cameras.html

Watch your child's caregiver while sitting at a traffic light or lunch meeting, or check on your business security from the other side of the world. Our built-in hidden video features all digital transmissions providing a crystal clear image with zero interference. With the IP receiver stream your video over the internet through your router, and view on either a PC or smart phone. Designed exclusively for DPL-Surveillance-Equipment, these IP hidden wireless cameras come with multiple features to make the user's experience hassle-free.

• Remote Video Access

• Video is Recorded Locally To An Installed SD Card (2GB SD Card included)

• Email Notifications (Motion Alerts, Camera Failure, IP Address Change, SD Card Full)

• Live Monitoring, Recording And Event Playback Via Internet

• Back-up SD Storage Up To 32GB (SD Not Included)

• Digital Wireless Transmission (No Camera Interference)

• View LIVE On Your SmartPhone!


* Nanny Cameras w/ Remote View
* Wireless IP Receiver
* Remote Control
* A/C Adaptor
* 2GB SD Card
* USB Receiver



Receiver Specs:

* Transmission Range of 500 ft Line Of Sight
* Uses 53 Channels Resulting In No Interference
* 12V Power Consumption
* RCA Output
* Supports up to 32gig SD

Camera Specs:

* 640x480 / 320x240 up to 30fps
* Image Sensor: 1/4" Micron Sensor
* Resolution: 720x480 Pixels
* S/N Ratio: 45 db
* Sensitivity: 11.5V/lux-s @ 550nm
* Video System: NTSC
* White Balance: Auto Tracking

Make Your Own Nanny Cameras:  Make Tons Of Money In A Booming, Nearly Recession-Proof Industry!

Your Primary Customers Include But Are Not Limited To Anyone In The Private Investigator, Government, Law Enforcement And/Or Intelligence Agencies Fields!

* You Buy Our DVR Boards And We'll Build Your Products! (Optional)

Our New Layaway Plan Adds Convenience For Online Shoppers

DPL-Surveillance-Equipment's layaway plan makes it easy for you to buy the products and services that you want by paying for them through manageable monthly payments that you set. Our intuitive calculator allows you to break down your order's purchase price into smaller payment amounts. Payments can be automatically deducted from your bank account or made in cash using MoneyGram® ExpressPayment® Services and you will receive your order once it's paid in full. Use it to plan and budget for holiday purchases, anniversaries, birthdays, vacations and more!

DPL-Surveillance-Equipment's Customers can now use the convenience of layaway online to help them get through these tough economic times.

We all shop now and then just to face a hard reality -- big credit card bills. However, our latest financing innovation can help you avoid that. Find out why more and more shoppers are checking out DPL-Surveillance-Equipment's e-layaway plan.

If you're drooling over a new nanny camera, longing for a GPS tracker, or wishing for that spy watch, but you're strapped for cash and can't afford to do credit, do what Jennie Kheen did. She bought her iPod docking station (hidden camera w/motion-activated DVR) online using our convenient lay-away plan.

Our online layaway plan works like the old-fashioned service stores used to offer. But, in Kheen's case, she went to DPL-Surveillance-Equipment.com, found the iPod docking station (hidden camera w/motion-activated DVR), then set up a payment plan.

"It's automatically drawn from my account," she said. "I have a budget, $208.00 a month.

In three months, Kheen had paid off the $650.00 iPod docking station. She paid another 3.9 percent service fee, which amounted to about $25.35 (plus $12.00 for shipping) for a total of $687.35.

"You pay a little bit each month," Kheen said. "It's paid off when you get it and you don't have it lingering over your head. It's great."

Flexible payment terms and automated payments make our layaway plan an affordable and fiscally responsible alternative to credit cards.

1. Register:

It's quick, easy and FREE! No credit check required!

2. Shop:

Select the items or service you want and choose "e-layaway" as your payment option. Our payment calculator makes it easy for you to set up your payment terms.

3. Make Payments:

Payments are made on the schedule YOU set. Check your order status or adjust your payments online in a secure environment.

4. Receive Products:

Receive the product shortly after your last payment. The best part, it's paid in full... NO DEBT.

More Buying Power:

* Our lay-away plan offers a safe and affordable payment alternative without tying up your credit or subjecting the purchase to high-interest credit card fees.

No Credit Checks or Special Qualifications:

* Anyone 18 years old or older can join. All you need is an active bank account.

Freedom From Credit Cards:

* If you are near or beyond your credit limit or simply want to avoid high interest credit card fees, our e-layaway is the smart choice for you.

Flexible Payment Schedules:

* Similar to traditional layaway, e-layaway lets you make regular payments towards merchandise, with delivery upon payment in full. Payments are automatically deducted from your bank account or made in cash using MoneyGram® ExpressPayment®

A Tool for Planning Ahead:

* Our e-layaway makes it easy for smart shoppers like you to plan ahead and buy items such as bug detectors, nanny cameras, audio bugs, gps trackers, and more!

No Hidden Charges or Mounting Interest:

Our e-layaway makes shopping painless by eliminating hidden charges and monthly interest fees. Our customers pay a flat transaction fee on the initial purchase price.


* You have the right to cancel any purchase and will receive a refund less a cancellation fee. See website for details.

Security and Identity Protection:

DPL-Surveillance-Equipment has partnered with trusted experts like McAfee and IDology to ensure the security and integrity of every transaction. Identity verification measures are integrated into our e-layaway system to prevent fraudulent purchases.

Note: Simply Choose e-Lay-Away as a "Payment Option" in The Shopping Cart

DPL-Surveillance-Equipment.com is a world leader in providing surveillance and security products and services to Government, Law Enforcement, Private Investigators, small and large companies worldwide. We have one of the largest varieties of state-of-the-art surveillance and counter-surveillance equipment including Personal Protection and Bug Detection Products.

Buy, rent or lease the same state-of-the-art surveillance and security equipment Detectives, PI's, the CIA and FBI use. Take back control!


Phone: (1888) 344-3742 Toll Free USA
Local: (818) 344-3742
Fax (775) 249-9320


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