Cisco's Chambers to press case for repatriation

"60 Minutes" appearance comes as Congress scrutinizes tax code for possible overhaul

Cisco CEO John Chambers will be on CBS's "60 Minutes" Sunday night to state Cisco's case, and the case of other multinational corporations in the U.S., on why companies should be allowed to repatriate overseas profits at a low tax rate. Currently, the U.S. taxes overseas profits at 35% when they are brought back over here.

Chambers and others have argued that this rate is a disincentive for Cisco and other companies to invest in the U.S. to expand operations and create jobs.  Other countries have a low tax rate - 2% or less - or none, Chambers has said.

Cisco has $40.2 billion in cash, but only $3.1 billion of that is in the U.S.  Multinational's currently have about $1 trillion stashed overseas that could be brought back here if, they say, the tax rate were lowered.

And Cisco, Google and others, including Texas Representative Kevin Brady, a senior Republican on the House Ways and Means Committee, are pressing Congress to enact a temporary "tax holiday" so they companies can repatriate some or all of those overseas profits. But even some Republican lawmakers are reluctant to grant one, according to this story in Bloomberg.

The last time Congress enacted a tax holiday was in 2004. It was intended to spur investment here and create jobs, but instead it prompted corporations to repurchase stock and pay dividends. Multinationals benefitting from the tax holiday even cut jobs in 2005 and 2006, despite overall economy-wide job growth in those years, blogged Michael Mundaca, assistant secretary for tax policy in the U.S. Treasury Department. And the holiday cost taxpayers billions, he stated.

All of this is setting the stage for Congress examining and perhaps rewriting the U.S. tax code. Indeed, many are wary of enacting a temporary tax holiday while the tax code is being scrutinized for possible broader overhaul.

So it is with this backdrop that Chambers meets with CBS News' Leslie Stahl on "60 Minutes" Sunday to discuss why corporations should be allowed to repatriate that $1 trillion now, while Congress examines a broader restructuring of the U.S. tax code. Here's an excerpt of the Chambers interview provided by CBS to The Wall Street Journal, which posted it in its blog:

CHAMBERS: We are dealin' with a tax system that is a dinosaur.... Every other government in the world have realized that the US has it wrong. They're saying, "I'm going to have lower taxes, period." That's what you see all across Western Europe, that's what you see in Asia in the developed countries.

STAHL: What if tomorrow Congress passed a quickie law and the tax rate was 20%? Would that solve everything?

CHAMBERS: I think it is the most important ingredient that we have to think about being competitive.

STAHL: You lower the rate from 35% to 20% - you lose something like $2 trillion in taxes. We have a horrible deficit crisis, debt crisis. That's almost too much money to lose. What's your answer to that?

CHAMBERS: My answer's very simple: every other developed country in the world has already done this. I'm not asking to give me a favor, or a hand out.

STAHL: You know what: it sounds it.

CHAMBERS: All we're asking is: Give us a level playing field. Get us close.

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