Figures from the Internal Revenue Service suggest that nonfinance companies based in the United States are holding more than $5 trillion in cash, triple what the Federal Reserve reports—idle money that Reuters columnist David Cay Johnston suggests would be better spent creating jobs, paying dividends and sharing the burden of taxes.
Much of that money sits in overseas accounts where it can accumulate untaxed. It’s a double-whammy for American workers and taxpayers, as Johnston makes clear.
For workers, idle cash means idle hands and minds. With one in five Americans unemployed or underemployed, and real median wages in 2010 back down to the level of 1999, this is no time for capital to go on an extended holiday.
For taxpayers, untaxed profits subtly reduce corporate tax burdens and increase the tax burden on individuals. Because taxes owed on offshore profits are not adjusted for inflation, they depreciate at the rate of inflation. That means a double whammy for taxpayers as government pays interest on money it borrows while its accounts receivable from multinational corporations lose value.