Forbes has a nice article up this morning, on the US Senator out of Colorado, who might let Merck, Pfizer, Lilly, Baxter, Abbott, and yes. . . Apple, Google and Microsoft. . . bring home some of the long-warehoused off-shore earnings and cash — tax free. [My May 2013 backgrounders are here, and here.]
Wait. Before you go ballistic, read the article. [The Forbes reporter is clearly a tax-maven, and yet able to offer the readership a plain English view of these rather esoteric proposals. Nice.] The idea is that Merck, Google and Apple and Abbott will buy (actually, Dutch-auction bid upon) US infrastucture bonds — and thus commit essentially to the rebuilding of roads, bridges and schools, nation-wide – and in so doing — be granted a “tax holiday,” for a like (or slighly lesser) amount of the permanently-foreign cash earnings, sitting anywhere in the EU, Japan, Northern Ireland, or the Caymans — depending on the company. So. . . Merck could bring home all the ex-US cash it wanted, tax free, if it put it all to work, here in the US — on rebuilding infrastucture, via a federal bond progam. I love it.
Which is probably why. . . it has only “a snow-ball’s chance, floating down the River Styx” of passing. Heh. But we shall see. Do read go read all of it, in Forbes, this morning:
. . . .Under the bill, multinational corporations would be granted the equivalent of a repatriation tax holiday for supporting the AIF. The tax holiday is on top of the return in investment from purchase of a bond (bonds are interest bearing).
Specifically, companies like Google, Apple and Merck, which have parked money offshore for years would be allowed to engage in “aggressively bidding” to buy the bonds. While the actual bidding process hasn’t yet been specified, the general idea is that companies would propose a multiplier for the amount of overseas income they would be allowed to repatriate to the country, income-tax free, in exchange for right to buy the bonds. . . .
It certainly wins points as a creative, singularly-elegant solution – to two vexing problems. Now we cross our fingers and hope. Hope that PhRMA lines up, and gives its armies of lobbyists marching orders — to push it through. Cough.
I suspect the association wants a “pure gift” — no strings attached, for its members. But a more enlightened wisdom might dictate a less Putin-like approach, here. This is not. . . the Ukraine, afterall. Smile. Speak up, Mr. Frazier. Support the “Colorado Compromise,” at PhRMA.