Tag Archive for John Chambers

| January 5, 2012
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Cisco Tries Bribing Shareholders For A Tax Cut

Cisco Tries Bribing Shareholders For A Tax CutEmbattled 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%.

Cisco logoMr. 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.

Cisco CEO promises to increase dividends if tax break passes“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.

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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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| October 27, 2011
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Cisco CEO Talks Cash at Tech Dinner

Cisco CEO Talks Cash at Tech DinnerSometimes my view from the Bach Seat is just so right….

The BusinessInsider reports that former Apple (AAPL) CEO Steve Jobs told his biographer Walter Isaacson what really went on when the tech titans supped with President Barack Obama earlier this year.

repatriation tax holiday that would allow major corporations to avoid tax payments on overseas profitsWhile the tech titans were slated to discuss America’s economy and what could be done to create more jobs in the U.S. according to Mr. Isaacson, Google‘s (GOOG) Eric Schmidt, then Yahoo (YHOO) chief Carol Bartz, and Oracle‘s (ORCL) Larry Ellison and Cisco (CSCO) CEO John Chambers annoyed Obama. The business leaders seemed more concerned with boosting their own company instead of America’s economy. Mr.Isaacson focuses on Cisco’s Chambers as an example:

Cisco's (CSCO) John Chambers annoyed President Obama“Chambers, for example, pushed a proposal for a repatriation tax holiday that would allow major corporations to avoid tax payments on overseas profits if they brought them back to the United States for investment during a certain period. The President was annoyed, and so was Facebooks’s Mark Zuckerberg, who turned to Valerie Jarrett, sitting to his right, and whispered, “We should be talking about what’s important to the country. Why is he just talking about what’s good for him?”

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I noted Cisco’s John Chambers’ editorial in the WSJ calling for a tax holiday last year.

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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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| March 7, 2011
Comments Off on Tech Titans Talk Tax Cuts with POTUS

Tech Titans Talk Tax Cuts with POTUS

Tech Titans Talk Tax Cuts with POTUSFortune is reporting that a group of tech, pharmaceutical, and energy giants are lobbying for a tax cut that would allow them to bring home the estimated $1 trillion they’ve got parked overseas at a steeply discounted rate. Fortune’s sources say that Apple (AAPL), Cisco (CSCO), and Oracle (ORCL)  are among the major players looking to win a one-year tax amnesty on their foreign earnings, allowing them to repatriate that money at a tax rate of about 5%, instead of the 35% they face now.

Multinationals prevailed on Congress to approve a one-year tax holiday once before, as part of a jobs package in 2004. Back then, the companies argued the relief would help them boost economic growth because they’d plow their repatriated money into research, investment, and hiring. And while plenty of outfits benefited from the break – 843 corporations made use of the holiday, bringing back a total of $362 billion, according to the IRS — the broader economic benefits were dubious.

The Treasury Department wrote rules trying to make sure that the recovered cash was in fact invested back into the companies. But money is fungible. Although the rules expressly prohibited using the funds for dividend payments or stock buybacks, later analysis has shown participants sent most of it to shareholders anyway. One study cited by Fortune from the National Bureau of Economic Research found that for every dollar of repatriated cash, companies bumped up shareholder payouts between 60 and 92 cents.

“A tax holiday would bring a substantial amount of cashback to the United States and paying that out to shareholders is good for the economy,” said study co-author Kristin Forbes, an economics professor at MIT’s Sloan School of Management and a member of then-President George W. Bush‘s council of economic advisers told Fortune. “But if you’re a politician claiming this will create a lot of jobs or new investment, it isn’t supported by the data.”

In order to sell the deal, Cisco CEO John Chambers and Oracle president Safra Catz argued in an October editorial in the Wall Street Journal that a second holiday would help put Americans back to work. But they don’t promise that companies would drive all of their repatriated money directly into job-creating investments. They acknowledge that companies might pass the money along to shareholders again. But Mr. Chambers and Ms. Catz argue on top of direct investments, the tax cut holiday would spur a new stimulus by boosting markets, thereby increasing consumer confidence. And they say the tax revenue itself could fund $50 billion worth of credits to encourage new hiring — a sum only possible in the unlikely event companies decide to bring home the entirety of their overseas reserves.

President Obama’s recent dinner with Silicon Valley’s tech titans was a star-studded event according to TechCrunch.

Obama tech- dinner toast

Invitee included Facebook CEO Mark Zuckerberg, Apple CEO Steve Jobs, Yahoo (YHOO) CEO Carol Bartz, Cisco’s CEO John Chambers, Twitter CEO Dick Costolo, Oracle CEO Larry Ellison, Netflix (NFLX) CEO Reed Hastings, Genentech Chairman Art Levinson; Google (GOOG) CEO Eric Schmidt; former state controller and venture capitalist Steve Westly Doerr, and Stanford University President John Hennessy. The event was held at Kleiner Perkins partner John Doerr’s home.

After the dinner, White House press secretary Jay Carney said the group talked about ways to invest in innovation and how to increase jobs in the private sector. He said Mr. Obama also discussed proposals to invest in research and development and his goal of doubling exports in five years.

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I don’t think it’s unreasonable to assume that what POTUS calls, “increase jobs in the private sector” would mean a “tax cut holiday” for the tech titans.

It should be no surprise that the Tech Titans who supped with POTUS were big political contributors and supporters of the tax cut holiday. What happened to “Yes We Can”?

 

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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