After Trying To Wheedle A Tax Holiday For Overseas Earnings, Cisco To Lay Off 14 Percent Of Workforce
And yet, they’re still arguing that they should get a tax holiday on their earnings abroad while they’re shedding employees like crazy . Who’s nuttier – them, or the politicians arguing this will create jobs? Cisco Systems Inc. (CSCO), the largest networking-equipment company, may cut as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, according to two people familiar with the plans. The cuts include as many as 7,000 jobs that would be eliminated by the end of August, said the people, who asked not to be identified because the plans aren’t final. Cisco, based in San Jose, California, is also providing early-retirement packages to about 3,000 workers who took buyouts, the people said. Eliminating jobs will help Cisco wring $1 billion in expenses in fiscal 2012, the company said in May. Cisco expects costs of $500 million to $1.1 billion in the fiscal fourth quarter as a result of the voluntary early retirement program, it said in a quarterly filing. I wrote about this back in March , when 60 Minutes did a boo-hoo story on these poor, poor overtaxed corporations like Cisco: One CEO who would talk to us was Chambers. Cisco is the giant high tech company headquartered in San Jose, Calif. He says our tax rate is insane. It’s forcing companies into these maneuvers, especially when many other industrialized countries including Canada are busy lowering their tax rates in order to lure our companies and our jobs away. “Every other government in the world has realized that the U.S. has it wrong. They’re saying, ‘I’m going to have lower taxes, period.’ That’s what you see all across Western Europe, that’s what you see in Asia in the developed countries,” Chambers said. I guess I should point out that these are the same companies supporting the Chamber of Commerce, who did everything but throw infants in front of an oncoming train to stop the Affordable Healthcare Act — you know, the thing that would make American companies more competitive with the Europeans, none of whom are paying for health insurance? So you might be a tad suspicious of this plea — and you would be right. Or I could point out that Cisco’s effective U.S. tax rate in the last quarter was a mere 12.1%, and that they give better payment terms to their overseas suppliers? Under a Republican administration, the Congressional Budget Office found that not only did the 2004 tax holiday not create jobs, it substantially increased the national deficit . From the Treasury Department: In assessing the 2004 tax holiday, the nonpartisan Congressional Research Service reports that most of the largest beneficiaries of the holiday actually cut jobs in 2005-06 – despite overall economy-wide job growth in those years – and many used the repatriated funds simply to repurchase stock or pay dividends. Today, when U.S. corporations have ready access to cash they have accumulated and are holding here in the United States, it is even harder to make the case that a repatriation holiday will unlock new investment and job creation . Why, even Tim Geithner says it doesn’t make sense to consider it outside of the context of broader tax reform . Of course, Big Biz and their Congressional handmaidens don’t want that ! Look, U.S. corporations have made it clear that they have no loyalty whatsoever to the economic well-being of the country. (Which could lead to a discussion about revoking corporate charters, but let’s not get sidetracked right now.) They will outsource and offshore no matter what, so the proper conversation should be about all the other benefits (including targeted tax breaks and subsidies) they enjoy as U.S. companies. Play me the world’s tiniest violin, Mr. Chambers. U.S. taxes are back to Roaring Twenties levels, and you’re screaming like a stuck pig? Puhleeze.
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on July 12, 2011. Filed under