Is Cisco short of cash in the U.S.?

That's a strange view. Paying a 35% corporate tax rate is not "patriotic", it's highway robbery. Something tells me if the US had a more efficient and lower tax rate this wouldn't be a problem. But charging a high tax rate and calling companies "unpatriotic" for not paying it is not the way to fix the problem and brings the cash (and jobs) back to the US.

Cisco does not have a responsibility to pay taxes, it has a responsibility to generate the greatest return for its shareholders. If the US government makes that goal harder by having high taxes, that's not Cisco's fault, that's Congress' fault. Tell Sen. Dorgan that.

Mike

PS - read the Fair Tax:

http://www.fairtax.org/site/PageServer?pagename=about_faq_answers

Find section half-way down the page about repatriate funds.

Cisco needs the money they floated in bonds so they can help finance deals through their resellers. Cisco is pushing very aggressive financing especially when trying to take over Nortel accounts. Cisco's plan is to become the last resort financier for deals where they can leverage their cash-on-hand against Nortel and HP.

Brad – your comments are a perfect example of taking “facts” and manipulating them around just to make a pre-determined point. Corporations have a responsibility to increase shareholder value. That’s why they exist – and when they fail to do that, the shareholders and the market punish them, often severely. They don’t have a mandate to make and manage money “patriotically.” Corporations are rewarded for the completeness of their ability and vision to increase that shareholder value. Why is paying a 35% repatriation tax patriotic? Why is being intelligent enough to not pay it unpatriotic? There is no relationship here.

You assert that all this accumulated cash is from companies that have been outsourcing their jobs overseas. Perhaps you haven’t noticed – Cisco, HP and many of the other companies you namelessly lump together actually generate a significant source of revenue by SELLING things to organizations that exist outside of the US. And generate profit from those sales. And that has nothing to do with outsourcing. So when that cash is generated, and those companies feel it makes better sense for their shareholders and overall corporate health to not skim 35% straight off the top of that, they’re now unpatriotic? Where’s the connection? I’ve looked through numerous corporate mandates (Google and their do no harm, etc.) and I’ve yet to find one that discusses patriotism over fiscal responsibility to its shareholders. In fact, many of these companies are truly global companies and do as much abroad, or nearly so, as they do in the US. So should they be similarly patriotic to all those countries they do business in? What – they can’t afford to do that? OK – then which ones should they be patriotic with? Just the ones they sell the most into? Or the ones where they employee the most people? Or the ones where there is the largest future potential market? Maybe you can help with that….

As long as we’re using the same facts to justify both sides of an argument, you pull in a quote about the top 12 repatriating companies also laying off employees. I read and re-read your note, but I failed to find where you detailed the cause and effect link(s) between those two acts. Most of the top 12 companies can be assumed to be large, fairly successful multinational companies, good at monitoring the markets they maneuver within. You’re insinuating that it’s outside of the realm of possibility that those companies happened to notice or project that there might be a market downturn and were getting in front of it? Or that they were involved in some acquisition or merger (HP and EDS???) and the layoffs were the result of eliminating corporate redundancies? You would have us make the leap that there is a direct correlation between repatriation, greed, and layoffs. In fact, you seem to have some secret data that allows you to deduce that for every $1M in repatriated money HP brought back, one employee had to go. $14.5B back, 14,500 employees gone. Amazing.

Finally, you yourself note that if companies brought their money back because of a tax break, other overseas companies would invest heavily as well. Seems to me to be a possible win-win situation. Congress reduces the rate to something more agreeable, companies pull back in their $600B-$750B in cash, overseas companies pour money in, and the government collects (reduced) taxes on that amount. Considering that $$$ is not coming back to the US right now, most people would agree that some % of $600B-$750B is a lot more than 35% of nothing. And maybe Uncle Sam wouldn’t have needed to take almost $1 trillion of my money (and yours) for a stimulus package.

But that’s still got nothing to do with patriotism – that’s just plain smart business. Who is greedy here? Companies for trying to avoid a 35% tax on the profit they’ve generated or the government for wanting to extort it out of them? Does it really matter? Seems to me there might have been a compromise out there that could have benefited everyone. Instead, this way, no one really wins.

So I’m not sure what axe you have to grind with Cisco or HP – perhaps you’re just a donor to Senator Dorgan, perhaps you hate Cisco for their stance on refurbished/gray market gear, perhaps you don’t like HP because they’re taking a bite out of your business. I’m not really sure. I don’t really care. But why don’t we start by not twisting up the facts with biased logic just to make a (political) point?