Cisco Systems proves the "job creators" dont need more money (tax breaks )

Cisco (CSCO) is reported to have more than 43 billion in cash just sitting around. So as the tax break crowd would have you believe, they'll be taking all that liquid money and coverting it to jobs, right?


http://www.businessweek.com/ap/financialnews/D9OIPT7O3.htm
Cisco's decision to cut 6,500 jobs, or about 9 percent of its global work force, is a "painful but necessary" measure to lower expenses and turn the networking gear maker around, Sterne Agee's said Tuesday


Too bad there looks like there will now be 6500 people who cannot afford computers and new toys. Had they done the opposite and hired an additional 6500 people, how many of those people would then in turn have enough money to buy a computer, driving up sales for Cisco and all the other players?

the link doesn't mention their cash on hand. Do you have a source for that portion?
Thanks.

Pull up CSCO and look at the balance sheet for 2010.

They have close to $40 billion in cash and short term investments. However, that doesn't mean that they are somehow "sitting" on it. They also owe $20 billion in current liabilities, so that will erase half of the short term assets. They've also got another $12 billion in long term debt that they need to service.

Sorry, but there's nothing particularly villainous here for a company of their size. They are sitting on about 6 months of revenue, which wouldn't be unusual, even for smaller businesses.

but we keep hearing that when the rich and corporations are given tax breaks and benefits, they'll have all kinds of cash for creating jobs, and that if we dare tax them, they'll stop hiring and start firing tons of people.

This flies in the face of reality, they've the means to hire people if they wanted, but there is no demand for the goods, so they dont need workers to make goods that people arent buying. We need to put money into the hands of people ho will spend it to get this country back to work.

I'm not arguing for a lower corporate tax rate in this post, but I think you are misstating the argument for why lower corporate taxes could create US jobs.

The reason that our corporate tax rates have the potential to hurt (or help) US jobs is not based on cash in hand, it's about how corporations recognize revenue. ExxonMobile, for example, paid taxes of roughly $20 billion last year. The problem is, they didn't pay it to the US government (they paid roughly $1 billion in US federal taxes).

If a multinational wants to open an office in the US, they are going to pay US taxes on the revenue generated by that office. If they can open the same office outside the US, and make the same money but pay lower taxes, what would be their incentive to open a US office? They'll simply recognize the revenue in Brazil, pay Brazilian taxes, and hold profits offshore for long enough that they aren't subject to US taxation. If you read last year's GE annual report, there's an extensive discussion of why GE maintains long term overseas investments - there are distinct corporate tax advantages. Take away those tax advantages, and GE now has an incentive for more domestic investment. One way to reduce that tax advantage is to lower the corporate tax rate in the US. The trick, of course, is how to do this without lowering your overall tax revenues. I know the standard DU response is "close the loopholes! make them pay more on that money that they make outside the US!", but I'm not sure how you do that legally without crippling the ability of any US company to own overseas investments. We're stuck playing in a global economy, whether we like it or not.