More U.S. Profits Stay Abroad

It is not surprising to learn many U.S. companies keep the money they're earning abroad in foreign accounts. The WSJ has been touching on this subject for sometime now, I've found this intriguing because at first I thought to myself these companies are attempting to skirt taxes they should be paying. However, after reading the article on why companies do this I completely understand. Under our laws any money a company earns abroad has to pay the taxes to the country in which they're doing business in, and again when the money is brought into the U.S. This isn't fair to be taxed twice and works as in incentive to keep money out of our country. Furthermore, it deprives businesses from reinvesting earnings from abroad which helps keep jobs overseas. The WSJ analysed 60 companies that had over $5 billion in off shore accounts, in some cases these large companies earned more overseas than they did here in the U.S. If tax law where changed to allow companies to bring earnings back into the country, perhaps our unemployment would go down.

Not all of the assets held abroad are kept in cash, some is used to build plant and equipment, research and development, as well as other business functions. If companies weren't penalized for success aboard, it is very possible they would build those plants in the U.S.

These companies aren't holding a small amount, General Electric for example has almost $108 billion held in offshore accounts, Johnson & Johnson $14.9 billion, and Oracle at $20.9 billion. Because of this significant amount of holdings, maybe it is time for lawmakers to figure out a way to foster business growth and stop penalizing companies for their success.