BUSINESS
01/23/2013 07:57 am ET

Corporations Hide Cash Overseas, If By 'Overseas' You Mean 'At Home:' Seven And A Half Things To Know

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Thing One: Staycation For Corporate Profits: U.S. companies hiding their cash from the taxman are hiding it in plain sight -- often right down the street.

Of the estimated $1.7 trillion in corporate cash supposedly being "permanently invested" overseas in order to avoid onerous U.S. corporate tax rates, most of it is actually parked in the U.S., writes Kate Linebaugh of the Wall Street Journal. Some of the biggest overseas-cash offenders, including Google and Microsoft, keep more than three-quarters of their "overseas" cash in the U.S., Linebaugh writes.

The companies keep the cash in the U.S. bank accounts of their foreign subsidiaries or invest it in U.S. stocks and bonds. Nearly all of the $58 billion in "foreign" cash recently held by Microsoft, for example, was in U.S. investments, mostly in U.S. banks, according to Linebaugh's reading of the company's latest SEC filings. So in that sense, at least, the money is maybe being put to work in America. But what it is not doing is being taxed, ever, because of the kabuki theater of our tax code, which lets everybody pretend U.S. cash isn't really U.S. cash -- even when those companies are magically able to bring it home in order to buy back stock or pay dividends, Victor Fleischer wrote last year in the New York Times.

This is sure to make both sides of the tax debate angry, Linebaugh notes. Those in favor of lower corporate tax rates (i.e., companies, and the people who love them) will say it is proof that our tax system treats U.S. companies unfairly and needs to be scrapped. But these companies almost never have to pay the statutory tax rate on any of their profits, foreign or domestic -- the 10 most profitable companies in the U.S. in 2011 paid a 9 percent tax rate, on average, according to a NerdWallet study. Many actually turn a profit on Tax Day. The system's not fair, all right, but it's hard to see how the companies are the losers, when they just get to make stuff up on their tax returns.

Thing Two: Debtpocalypse Later: The House of Representatives will likely vote today to retreat, at least temporarily, from a fight over the debt ceiling. They'll introduce a bill to suspend the debt ceiling until May, which will lessen the likelihood of the U.S. government defaulting on its debts, the Washington Post writes. President Obama is cool with this, writes the Wall Street Journal, as well he should be: In a rare moment of negotiating chutzpah, he forced the GOP to abandon its threat to wreck the economy -- at least until May, when this drama could start all over again. In the meantime, we'll have fights over funding the government and leftover fiscal-cliff spending cuts.

Thing Three: UK Is Totally Leaving The EU, It Means It This Time: British Prime Minister David Cameron boldly declared this morning that the European Union might not have the UK to kick around forever, calling for a national referendum on whether or not to stay in the EU -- to take place by 2017. Hey, these things take time. Actually, Cameron really doesn't intend to leave the EU, writes Quartz's Naomi Rovnick. His threat is just a ploy to wring a little more power out of Brussels. But he has stirred up a domestic hornet's nest, warns the Financial Times.

Thing Four: Currency Wars! The Bank of Japan's bold-ish plan to print money forever in order to fend off deflation is raising the specter of a global currency war, writes the Financial Times, one in which nations willy-nilly devalue their currencies forever to help their own economies. Meh, this has been going on for years already, no? Anyway, financial markets think it will help Japan for only a few months, before more-radical steps will be needed, Reuters writes.

Thing Five: Microsoft Considers Repatriating, Wasting Some Cash: For some reason, private-equity firms are still kicking around the idea of loading up on debt to buy out struggling computer maker Dell. They might get some help from the company that makes the slow, glitchy software that goes on Dell computers: Microsoft, which is considering adding "several billion dollars" to the buyout, the New York Times writes.

Thing Six: Housing Market Less Terrible: The housing market continues its slow climb out of Death Valley. Home re-sales in 2012 hit their highest level in five years and posted their fastest growth rate since 2004, the Wall Street Journal's Nick Timiraos writes. Sales could slow down this year, mainly because there aren't enough houses available, mainly because nobody has any equity in their houses still, so they're waiting to put their houses on the market.

Thing Seven: Dumb Name, Cool Concept: A company called Deep Space Industries, based in Santa Monica, yesterday announced plans to send robots into space to mine asteroids. It's an awesome idea, and hopefully they'll someday save the earth from destruction while Aerosmith songs play in the background. But I must churlishly point out that an asteroid floating around just outside of Earth orbit is not, technically, "deep space." Just saying.

Thing Seven And One Half: The Infant Should Have Been Packing Heat: On this day in 1570, in Linlithgow, Scotland, a supporter of Mary, Queen of Scots, stuck a carbine out of a window and used it to shoot and kill a man passing on the street below. That man was James Stewart, the First Earl of Moray, who handled kingly business on behalf of Scotland's infant King James VI, and this was the world's first recorded case of assassination with a gun. Wayne LaPierre could not be reached for comment.

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