By Katie Kieffer
Forget high stakes Las Vegas poker. If you want to win big, come over to my place for a round of $1,000,000,000,000 Hold ‘em! The pot is a trillion dollars. Grab your hoodie and sit at my poker table for a while.
Last year, I invited the “U.S. Government,” “U.S. Corporations,” and “Foreign economies” over to play this juiced-up version of Texas Hold ‘em. I eventually kicked the “U.S. Government” out because, instead of playing like a serious competitor, it kept passing its chips to “Foreign economies” under the table.
In this version of poker, there are typically three players and two winners who divide the pot. Needless to say, last year, “U.S. Corporations” and “Foreign economies” took home the bacon. And there was a lot of bacon.
This year, Cisco Systems CEO John Chambers and Oracle Corporation President Safra Catz created “marked cards” for the U.S. Government to help it learn the game. This was kind of them to do. Apparently they would prefer to split the pot with the U.S. Government rather than with foreign economies. Call it crazy or call it patriotism. Either way, the U.S. Government has a good shot at winning if it reads this cheat sheet.
Here are the “marked cards” that will tell the U.S. Government how to win at $1,000,000,000,000 Hold ‘em:
- U.S. tech giants like Microsoft, Cisco, Google, Facebook® and Oracle are shifting their income abroad because they are for-profit businesses. They create shareholder value by minimizing expenses and maximizing profits.
- The U.S. Government needs to demotivate corporations from taking advantage of legal tax loopholes such as the “Double Irish” and the “Dutch Sandwich” that allow them to move their profits overseas, dramatically cut their taxes and consequently incur larger profits than they would ever hope to achieve in the U.S. after taxes.
- For example, by using these income shifting strategies, Google lowered its tax rate to just 2.4 percent and cut its taxes by $3.1 billion over the past three years.
- Chambers and Catz report in The Wall Street Journal that, “One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations – and that they could repatriate to the United States.”
- So, the U.S. Government literally has about a trillion dollars from U.S. corporations sitting on the table. The U.S. Government also has a $1.4 trillion deficit. So, if 2 + 2 = 4, then the U.S. Government needs the money.
- A simple solution to close the deficit, create jobs and recharge the U.S. economy would be to reduce the current U.S. corporate income-tax rate of 35 percent to a rate lower than the foreign competition’s best rate of 2.4 percent. While the U.S. Government would surely squeal at this proposal, the long-term interest of this country requires that the U.S. Government take every step available to keep U.S. corporations on its soil.
Will the U.S. Government play to win $1,000,000,000,000 Hold ‘em or will it leave the money on the table for foreign players to grab? We’ll find out soon, depending on what the U.S. Government decides to do with the corporate income-tax.