Expect nothing more from sit-down with Chambers and 19 other CEOs on hiring and stimulating economy
President Obama is meeting with Cisco CEO John Chambers and 19 other corporate leaders today in an effort to encourage more domestic hiring to help spur the US economy. President Obama will likely get an earful from Chambers on the need to lower taxes on overseas profits in order to do that.
Cisco’s position on repatriation of overseas earnings is well documented. Cisco claims the 35% US tax on overseas profits brought back into this country discourages acquisitions and investments in the US. Other developed countries tax overseas earnings at 0% to 2%, Cisco has said.
Chambers and Oracle President Safra Catz have said that even if the repatriated earnings were taxed at 5%, it would create a privately-funded economic stimulus for the US of up to a trillion dollars and $50 billion in tax revenue for the government. They also said up to two million Americans could be put back to work at no cost to the government or taxpayer.
This is what Obama will hear from Chambers. But will it be convincing? Especially after Cisco has pretty much gone ahead and acquired mostly US companies anyway over the years – and after the Homeland Investment Act of 2005, which was founded on the same low-tax-for-repatriated-profits platform, apparently failed to stimulate the economy. Instead, in enriched shareholders.
Cisco alone is sitting on a $30 billion cash hoard overseas. Obama wants that spent here. Cisco wants a tax rate far lower than 35% — even lower than 10%. Expect these meetings between Obama and business leaders inject more goodwill into the effort than progress. Meeting with the 20 business leaders will produce little more than a good photo opportunity for Obama and all involved.
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