With the election season behind us, as a nation it’s time we come together and quickly address the serious challenges facing the U.S. economy and American workers. Our number-one goal must be to restore confidence in our economy and put people back to work.
As a U.S.-based multinational company, Cisco is committed to the continued economic growth and technological leadership of the United States. Given that it is the world’s largest economy, the United States must continue to drive global economic stability through policies that create jobs, promote innovation and foster new opportunities at home and abroad. If we don’t, we run the risk of being left behind. Just this week, a China-based company claims to have developed the fastest supercomputer in the world. This kind of innovation has previously been a hallmark of the United States—a leadership position created by commitment and investment from both government and the private sector. This country must have an environment where innovation and investment is encouraged and rewarded.
Currently, however, U.S. tax policy does the opposite. Incremental tax rates as high as 35% on money made overseas discourages companies such as Cisco from bringing back these resources and investing them at home – whether to create new jobs, boost R&D spending, or return value to shareholders. This high taxation of repatriated foreign earnings is in marked contrast to the tax practices of almost all of the world’s major economies—Japan, Germany, United Kingdom, France, Spain, Italy, Australia, Canada, Russia, and the Netherlands, to name a few.
Like other companies, Cisco makes its hiring and investment decisions based on how to create growth opportunities while delivering value to our customers, partners, shareholders and employees. Among the key factors that drive investment and job hiring decisions: economic conditions, market opportunities and favorable tax policy.
As my colleague Safra Catz of Oracle as well as many other U.S. business leaders have said, we believe that at least temporarily reducing the incremental tax rate on foreign earned profits would encourage companies to invest in the U.S. One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—an amount larger than the original stimulus. Imagine what an injection of hundreds of billions of dollars in capital could do for the country.
Almost all projections for job growth next year have unemployment staying at extremely high levels, higher than 9%. This proposal will obviously not solve the problem alone, but it is a very good start and costs the American taxpayer nothing. Our leadership must embrace this program along with other ideas to gain the momentum necessary to break us out of this challenging and even dangerous lack of job creation environment that we find ourselves in today.
Cisco currently has more than half of its employees – more than 38,000 – in the United States, despite the fact that the majority of our sales growth is occurring overseas. We have been one of the few companies creating jobs during this difficult economic period, and in the last year alone we added over 3,000 jobs right here in the United States. Our commitment to the U.S. economy and to the American worker is strong and we’ve made the investments to prove it. But more importantly, business and government must work together to put America back to work.
This past Tuesday, the American electorate spoke and the message is clear: Washington needs to focus on getting the economy moving and promoting job creation. Business must play a key role in helping this to happen. That is why I have been advocating for policies to stimulate the economy, like repatriation. On behalf of Cisco, I congratulate those newly elected to Congress – and now we look forward to working with you and your colleagues to create conditions for continued U.S. economic growth and recovery.