Firms Keep Stockpiles of Foreign Cash in US

The Wall Street Journal published in interesting article this week on how American Companies are able to house an estimated $1.7 trillion dollars in accounts that won't be taxed. Corporate tax rates in the U.S. are among the highest in the world, so there is significant incentive to finding loopholes that allow businesses to keep their earnings.  Businesses' foreign subsidiaries have bank accounts in the U.S. where the money is held but until the money is moved to the parent company no taxes have to be paid. As long as firms declare capital is permanently invested in foreign investments. The U.S. is the only nation that requires a firm to pay taxes on money is has earned abroad. Many of these large firms have employed lobbyist for corporate tax reform where companies have to pay 35% on their earned income. The lobbyist are pleading for foreign income be allowed back in the U.S. without paying taxes on it, then sending the money back to the shareholders in the form of dividends where it will be taxed. It would also allow businesses to invest in new technologies or hire more people in an ailing economy. EMC, a large network storage firm is holding $5.1 billion dollars from the eyes of the government where it could use that money for reinvestment.

Firms may also wish to permanently store their funds in foreign accounts for reinvestment in new factories or research and development abroad. Businesses cite the 35% tax on earnings as the sole reason for not bringing earnings back into the U.S. economy. As fresh debates on taxing take place businesses are hopeful that an overhaul of the corporate tax code is rewritten to one that makes more sense for businesses.
 
Upon reading this article it gave me some insight to how corporations are able to retain more of their earnings.

http://online.wsj.com/article/SB10001424127887323301104578255663224471212.html