Embattled Cisco (CSCO) CEO John Chambers recently urged the networking giants shareholders to lobby congress for a big corporate tax break. He tried to bribe promised to increase their dividend if the tax break comes through reported the BusinessInsider.
BI explains the CEO was talking specifically about repatriation, the term for when multinational corporations bring cash from overseas back into the U.S. Today they are charged the full corporate tax rate, 35%.
Mr. Chambers has been the poster child for multinationals like Cisco wanting to be granted another so-called “repatriation tax holiday” that would allow them to bring back more than a trillion dollars at a much lower tax rate. He even appeared on 60 Minutes arguing for the plan. (I have written about Cisco’s efforts to dodge taxes here and here)
Mr. Chambers made the case that a repatriation tax holiday would be of personal benefit to Cisco shareholders. “Repatriation at a rate of between zero and 2 percent puts us on a level playing field,” he said. If Cisco could bring its overseas funds back it would spend them on beefing up manufacturing sites, jobs and “if approved” the company would “increase dividends,” he said.
“The current tax system was developed when Microsoft (MSFT) wasn’t even public,” the Cisco CEO said. He urged the assembled to “Take time to send a note to members of Congress and others,” he urged.
In 2004 Cisco and other multinationals were granted a tax holiday. Opponents of a tax holiday for repatriation aren’t convinced that Cisco needs the tax break now. Some say that multinationals have accumulated offshore cash through gimmicks. They also point out that corporations can borrow against their overseas stash at really low rates and will use this as an ongoing method to avoid paying U.S. taxes.
Related articles
- Cisco Shareholders: Stop Helping Government Crackdowns (CSCO) (businessinsider.com)
Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
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