Yesterday, I noted that Silicon Valley expressed its displeasure with President Obama’s plans to require corporations to pay billions of dollars in U.S. taxes on foreign earnings that they have previously been allowed to defer.
Today, there’s more whining from the tech companies that boosted Obama’s campaign and filled his coffers.
Calll the wahmbulance (hat tip – William Amos):
Carl Guardino usually comes across as an amenable, mild-mannered Silicon Valley executive. But not on Monday. Not when he watched President Obama promising to end overseas tax breaks for U.S. companies that “create a job in Bangalore, India, (rather than) one in Buffalo, N.Y.” Guardino, CEO of the Silicon Valley Leadership Group, angrily described Obama’s language as “not only discouraging, but divisive.” The president’s implication that companies such as Cisco Systems and Hewlett-Packard merely “ship jobs overseas,” and are being rewarded in the bargain, came as a shock to Guardino, who otherwise described the president as “brilliant and respected by so many in the tech sector who are counting on the administration as their ally.”
Indeed, Obama’s proposal to limit U.S. companies’ ability to defer paying U.S. taxes on offshore earnings does put Bay Area companies doing a lot of business overseas directly in the crosshairs. “It would adversely impact our ability to invest and grow our business in the (United States) and to compete against our foreign competitors,” said a spokesman for Cisco.
Google, whose CEO, Eric Schmidt, is supposed to be a close buddy of Obama’s, said it is “too early to evaluate the potential effect on Google’s operations, as there will likely be multiple proposals considered.”
…So, doth Guardino et. al. protest too much? Not according to Atulya Sarin, a professor of finance at Santa Clara University. “It’s a bad idea from the word go,” said Sarin, who has consulted with the Internal Revenue Service and with Fortune 100 companies on international tax issues. “Increasing these taxes will reduce after-tax profits, which will reduce incentives. Right now, the administration should be helping Silicon Valley maintain its competitive edge, not making it less so. I hope saner minds will prevail.”
Reap. Sow. Repeat.