One of Zero Hedge's greater contributions to society in 2010 was finally putting the "cash on the sidelines" BS that was every emptyheaded pundit's go-to line when cornered and with nothing else to retort, in the trash bin of intellectual sophistry where it belonged. What surprised us is that it took as long as it did before someone dared to point out the flagrantly obvious. That said, today Bloomberg has released a terrific piece of investigative reporting, that may very well refute much of what we said, since it appears that contrary to legal permissions, companies have been very busy using the gray area in the tax code (the same that gets ordinary citizens in lots of trouble with the IRS but not mega corporations, never mega corporations) to repatriate tens, if not hundreds of billions in the past few years. Meet the "Killer B” and “the Deadly D" just two of the strategies that have allowed the following to happen: Merck & Co. bringing more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering-Plough Corp.; Pfizer Inc. importing more than $30 billion from offshore in connection with its acquisition of Wyeth and taking steps to minimize the tax hit on its publicly reported profits; Eli Lilly & Co. carrying out many of the steps for a tax-free importation of foreign cash after its roughly $6.5 billion purchase of ImClone Systems Inc. in 2008. In other words, despite America's deplorable budget condition, where every dollar in organic revenue is matched by one dollar of debt issuance, companies are doing more than ever to avoid paying any taxes... anywhere.
From Bloomberg:
http://www.zerohedge.com/article/how-killer-b-and-deadly-d-strategies-allow-companies-repatriate-billions-and-find-higher-irrInteresting point at the end of the article.
In other words, in the biggest of paradoxes, as long as companies are allowed to use tax schemes to defraud America, they will have even less of an interest to actually hire, as the IRR to the bottom line from tax evasion is greater than that from organic growth! Please reread this sentence as it is critical, and goes to the heart of America's gradual transition to what some call a fascist corporatocracy, coupled with ever increasing unemployment. For all those wondering why the unemployment is and continues to be sky high, look no further than the corrupt tax gatherers.
There you have it!
:banghead:
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