"The Fed’s latest Flow of Funds report showed that U.S. nonfinancial companies held $1.7 trillion in liquid assets at the end of March"
" newly released IRS figures show that in 2009 these companies held $4.8 trillion in liquid assets, which equals $5.1 trillion in today’s dollars, triple the Fed figure."
"Why the huge gap?"
"The Fed gets its data from the IRS, but only measures the flow of funds in the domestic economy. "
"The IRS reports the worldwide holdings of U.S. companies"
earnings ?
"since 2009 real pretax corporate profits have soared,
from less than $1.5 trillion in 2009 to $1.9 trillion in 2010 and almost $2 trillion in 2011... nearly $1 trillion of increased profits over two years, while actual taxes paid rose less than a tenth as much.....Dividends, wages and capital expenditures all grew less than profits, while undistributed profits rose."
" The result: more cash."
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recall
" Congress lets overseas profits accumulate untaxed, so long as offshore subsidiaries own the cash"
"taxed only when and if brought here "
the remedy is at hand of course
the excess cash tax
"A business holding more cash than its operations reasonably require....
on top of the 35 percent income tax a corporation can be hit with
an additional 15 percent levy under Section 531 of the Internal Revenue Code"
". The Tax Court even devised a mechanical test in 1965 for how much is too much."
however
"Historically the IRS has levied only privately owned firms or publicly traded companies with few shareholders."
and yet
" Internal Revenue Code Section 531 applies to all corporations. President Ronald Reagan signed Section 532 (c), which made that explicit, though with an exception for untaxed offshore profits."
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all this sets up a nice contrast
" taxes owed on offshore profits are not adjusted for inflation
so they depreciate at the rate of inflation. "
" while government pays interest on money it borrows
even as major accounts receivable from multinational corporations
lose value to inflation ".
" tell your senator or representative
you want Section 531 vigorously enforced – now –
and the offshore loophole closed immediately."
