Kerry's Plan Spotlights Huge Untaxed Earnings

[TinaTyson]

U.S. Firms Keep Billions Overseas
Kerry's Plan Spotlights Huge Untaxed Earnings

http://www.washingtonpost.com/wp-dyn/articles/A43377-2004Apr1.html?nav=rss_politics

With sales up 5 percent last year, Merck & Co. was not satisfied: To hold down costs, the pharmaceutical giant shed 3,200 jobs as 2003 drew to a close, and announced that an additional 1,200 positions would go this year.

But Merck's picture abroad was quite different. It made 1,300 new hires in 2003 outside the United States, on top of the 900 brought on the year before. Company documents indicate that Merck had a cumulative $18 billion in foreign earnings untaxed by the end of last year, $3 billion more than in 2002. And the company said it had no intention of ever paying U.S. taxes on that burgeoning sum.

"Foreign earnings of $18.0 billion . . . have been retained indefinitely by subsidiary companies for reinvestment," Merck's annual filing with the Securities and Exchange Commission said. "No provision is made for income taxes that would be payable upon distribution of such earning."

Last week, Sen. John F. Kerry (Mass.), the likely Democratic nominee for president, made such lucrative income-tax deferrals a focal point of his campaign, asserting that they are driving companies to expand abroad. Merck's numbers appear to back that up, and so do those of several other big U.S. companies.

(more)

[Maine-i-acs]

1. Go get 'em John.

When the incentive to drive jobs away dries up, so will the wave of outsourcing.

[David Dunham]

2. A very smart plan by Kerry.

[Another Bill C.]

3. This really proves a lie

that outsourcing will increase a company's profits and allow that company to hire more help. I can't argue more profits allow a company to hire more help but most companies don't (unless it's more overseas help as in this case). They increase their executive salaries and possibly their dividends.

Herein also lies a clue as to who's benefitting from the alleged economic upturn we are supposed to be experiencing. The "upturn" is producing nice corporate profits, hugely inflated executive salaries, some dividends, and very little job creation.