Relocating Headquarters
That combination of policies provides an incentive for formerly U.S.-based companies such as Actavis Plc, Endo International Plc and Eaton Plc to move their headquarters outside the country through mergers. This week, Chiquita Brands International Inc., based in Charlotte, North Carolina, announced a merger with Fyffes Plc that would locate the world’s largest banana company in Ireland.
In his final message after more than eight years as chief executive officer of Qualcomm Inc., Paul Jacobs on March 4 gave shareholders what he called a “homework assignment.”
“Send your Congress people your opinion that you’d like American companies to be able to bring offshore money back to the United States to either reinvest” or return to shareholders, said Jacobs, now executive chairman of the San Diego-based chipmaker, which has $21.6 billion in overseas profits.
Congress should impose rules to make it tougher for companies to shift earnings and intellectual property out of the U.S., said Representative Lloyd Doggett, a Texas Democrat.
‘Choose Between’
“If you can choose between San Antonio and Shanghai, and you pay no taxes one place and 25 to 35 percent at home, you’re encouraged to move jobs overseas,” he said in an interview.
For U.S. corporations, the untaxed cash keeps building up and few are choosing to bring it home, instead preferring to borrow for any domestic cash needs.
GE’s $110 billion leads U.S. companies, followed by Microsoft’s $76.4 billion, Pfizer’s $69 billion, Merck & Co.’s $57.1 billion and Apple’s $54.4 billion.
“Until they change the tax law, there’s not much other than extreme distress in the United States that would precipitate a repatriation,” said Jennifer Blouin, an accounting professor at the University of Pennsylvania’s Wharton School who has studied companies’ decisions about overseas profits. “I’m stumped as to why we can’t change the U.S. system.”