Tech firms' offshore havens keep tax rates low

**FILE**In this Oct. 18, 2006 file photo, the exterior view of Advanced Micro Devices (AMD) headquarters in Santa Clara, Calif., is shown. Advanced Micro Devices Inc. says it pared its fourth-quarter loss, but not as sharply as Wall Street had hoped. (AP Photo/Paul Sakuma, file) less **FILE**In this Oct. 18, 2006 file photo, the exterior view of Advanced Micro Devices (AMD) headquarters in Santa Clara, Calif., is shown. Advanced Micro Devices Inc. says it pared its fourth-quarter loss, but ... more Photo: Paul Sakuma, AP Photo: Paul Sakuma, AP Image 1 of / 3 Caption Close Tech firms' offshore havens keep tax rates low 1 / 3 Back to Gallery

What if there were a Buffett Rule, not just for millionaires, but for high-tech companies making a mint in Silicon Valley and elsewhere?

For 26 of 30 Fortune 500 tech companies, it would mean coughing up far more than the 30 percent tax rate, which President Obamahas proposed for the wealthier among us, according to a report released this week.

Forget about the nominal 35 percent corporate tax rate, described as "almost entirely fiction" by the Greenlining Institute in Berkeley, which compiled the report. Try instead an average of 16 percent in 2011, the year in which they collectively made $181 billion in profits.

In another example of the rich getting richer, the report found that, since 2009, their tax rates have decreased as their profits have grown.

One of the biggest names, as the report's authors noted in a Chronicle op-ed piece on Monday, is Apple. Its tax rate was 9.8 percent in 2011, the year it made $34 billion.

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But there were others, all of them profitable, that paid even less last year. They include Sunnyvale's Advanced Micro Devices (1.8 percent) and Amazon.com (2.4 percent). Some paid a bit more, like Google (11.9 percent) and Hewlett-Packard (12.6 percent).

The chief escape hatches for most of the companies - as for many U.S. multinationals - are overseas tax havens.

Cash held overseas by the tech companies in 2011 amounted to $430 billion, a 21 percent increase from 2010, according to the report, based on data from Securities and Exchange Commission filings and General Accounting Office documents. Of the 51 foreign subsidiaries the companies set up last year, 19 "were in tax haven jurisdictions as identified by the GAO." Sixteen of the companies had 10 or more subsidiaries in tax haven countries, said the report.

Silicon Valley believes it has an app for that: repatriating overseas profits at a U.S. tax rate as low as 5 percent. Much of the money, leading supporters insist, would be used to create jobs at home.

The report is deeply skeptical of the proposal, which is contained in several bills in Congress. Echoing the findings of the U.S. Treasury Department and the nonpartisan Congressional Research Service, a similar measure in 2004 "cost billions in revenue and failed to promote jobs or investment within the U.S.," the report says.

So far, the Obama administration has resisted the idea, despite a letter to President Obama and congressional leaders in November signed by high-tech honchos including Steve Ballmer of Microsoft, John Chambers of Cisco Systems and Safra Katz, president and CFO of Oracle. According to the report, Microsoft had $44.5 billion stashed overseas in 2011; Cisco had $36.7 billion; Oracle had $20.4 billion.

The report is more supportive of another piece of legislation, the Stop Tax Haven Abuse Act, sponsored by Sen. Carl Levin, D-Mich., and other Democratic lawmakers, which would close a number of overseas tax loopholes. It also recommends putting federal contracts off-limits to companies with offshore tax havens.

How might these competing reform proposals play out? Probably not far in an election year. But, as the report notes, "About 10 years ago, Silicon Valley firms ranked 53rd out of all industries in their total amount of lobbying-related spending in Washington. Now, Silicon Valley companies as a group rank fourth." ( sfg.ly/HWohBo)

Paying retail: The four tech companies that paid, on average, more than a hypothetical Buffett Rule rate of 30 percent from 2009 to 2011, are: SAIC Corp., a systems integrator in San Francisco (37.7 percent); General Cable, a Kentucky company specializing in wiring technology (44 percent); Samina-SCI Corp., an optical components firm in San Jose (54.3 percent); and NCR, a Georgia company that manufactures ATMs (62.7 percent)

No explanation was offered as to why these companies paid way more than their fair share in those years.

Slow boat from China: Despite the talk lately of "inshoring" jobs, there's a ways to go, apparently. Whereas U.S. multinationals increased domestic employment by 0.1 percent in 2010, their overseas job rolls rose by 1.5 percent, according to a report this week from the U.S. Commerce Department.

Capital investments by U.S. multinationals at home increased by 3.3 percent, but by 5.5 percent overseas in the same period, said the report ( sfg.ly/HWhQy5).

Believe it or not: Americans are feeling a bit better about their banks these days.

According to J.D. Power and Associates, while "consumers are growing increasingly dissatisfied with fees, banks are able to offset it with higher satisfaction in other areas, such as banking facilities, account activities and problem resolution."

Overall, J.D. Power's index of retail banking customer satisfaction rose one point this year, despite the unhappiness with fees, especially the monthly maintenance kind.

In California, the major banks garner less satisfaction than their smaller rivals. Topping the list, as it did last year, is Rabobank, a Dutch bank that services rural and agricultural communities up and down the state. Coming in second: California Bank & Trust, a regional bank headquartered in San Diego, followed by U.S. Bank in Minneapolis and Bank of the West in San Francisco.

In fifth place, but still one of the "better than most," is San Francisco's Wells Fargo. That beats the "about average" ratings for Chase and Citibank. As for Bank of America, it's the sole occupant of "the rest" category.