We all know how much MS needs the money...

[link|http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AO_xFBhTBTWljcm9z|Here] from Bloomberg.

Washington, Nov. 9 (Bloomberg) -- U.S. companies such as Microsoft Corp., Procter & Gamble Co., and Pfizer Inc. are asking Congress to cut taxes on profits from overseas operations so they'd pay a rate of about 5 percent compared with current rates up to 35 percent.

The temporary tax break would return to the U.S. an estimated $100 billion in international profits, providing an infusion of capital that would spur business activity, lobbyists say. It's likely to be offered as an amendment to economic stimulus legislation on the Senate floor next week.

``It's a pretty daring proposal, but it would be effective,'' said Bill Sample, director of domestic taxes for Microsoft. ``We've been telling members of Congress the proposals advanced would certainly encourage us to repatriate money and invest it back in the U.S.''

Many multinational companies have large cash reserves overseas because they don't need the money for expansion and don't want to pay U.S. taxes of 35 percent, reduced by taxes paid to foreign governments.

[...]

Some multinational firms, especially pharmaceutical companies and manufacturers of computer hardware and software, have stepped up lobbying efforts for the Torricelli amendment. It would exempt from tax 85 percent of dividends distributed by foreign affiliates for an eight-month period. That would result in an effective tax rate of 5.25 percent, Grafmeyer said.

``You could pretty much do anything you wanted'' with the money, Sample said. Options include buying back company stock to increase its price, paying down debt, building a plant, or hiring workers. Under discussion is whether to prohibit companies from using the money to boost dividends to shareholders. The use of the money would have to be approved by the company's board.

Billions Invested

The proposal appeals most to companies with billions in profits in countries that they have no intention of returning to the U.S. because of U.S. taxes. That includes most multinational companies, who usually list those earnings in their annual reports as ``permanently invested overseas.''

It sounds like another bit of screwiness in the US tax code (why isn't it taxed at the same rate as the US profits?), but it worries me that they're wanting to change this now. Especially if MS is advocating it. And do we really want to drag that much money from overseas countries now when their economies are weaker than ours?

Cheers,
Scott.