Details of President Obama’s Dec. 15 meeting with the nation’s top CEOs are now emerging. While no love was lost, by all accounts the meeting was cordial, with the CEOs specifically asking for a holiday for the so-called “repatriation tax.”
The move, according to Bloomberg, would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.
The money−including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes−is supposed to be taxed at up to 35% when it’s brought home, or “repatriated.” Executives including John Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy, reports the news service.
As Bloomberg notes, what nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”
The news service notes Merck & Co Inc., the second-largest drugmaker in the United States., last year brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering-Plough Corp., securities filings show. Merck is also appealing a federal judge’s 2009 finding that Schering-Plough owed taxes on $690 million it had earlier brought home from overseas tax-free.
The largest drugmaker, Pfizer Inc., imported more than $30 billion from offshore in connection with its acquisition of Wyeth last year, while taking steps to minimize the tax hit on its publicly reported profit.
Disclosures in Switzerland and Delaware by Eli Lilly & Co. show the Indianapolis-based pharmaceutical company carried out many of the steps for a tax-free importation of foreign cash after its roughly $6 billion purchase of ImClone Systems Inc. in 2008.