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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.

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8 Comments.


  1. John,

    I agree that this is a smart move to inject some life into the economy. Plus it is fair as companies like Cisco already paid taxes abroad on this income.

    On Wednesday I suggested this approach in a Huffington Post commentary: (Government should) address these issues and take fundamental actions to encourage investment and job creation such as providing tax rate stability, allowing repatriation of dollars taxed overseas and reducing the federal deficit.

    Here’s the link: http://www.huffingtonpost.com/gary-shapiro/the-lesson-americans-care_b_778172.html

    Regards,

    Gary

    Gary Shapiro
    CEO
    Consumer Electronics Association

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  2. Indeed, a recent Gallup poll found that 31 percent of Americans view the economy as the most important problem facing the country today; 22 percent saw jobs as the nation’s main concern. A recent Fox News/Opinion Dynamics poll revealed that one in three registered voters viewed jobs and the economy as the top priority for the federal government.

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  3. So some specifics please John,

    What’s the split? How would the new revenue get spent between paying dividends, buying back stock, buying companies and capital spending and job creation?

    Is there a way for the legislation to get specific? Perhaps legislated performance measures come to play where each year job creation and US capital spending is reported against dividend pay-out etc. and returned to the Fed if the targets aren’t met…

    Perhaps community college education support is part of the equation as a win-win for company training needs coupled with a free workforce education program. Students (old and young) would be accountable too. They pay the community college back if they don’t finish their classes.

    Seems like Cisco could be uniquely qualified to provide tele-classes as part of the deal, eh? I would even enjoy a little Indian accent from a good teacher.

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  4. John
    I am currently abroad, but I read the newspapers and watch the news to see what is happening in America.
    “Cisco is committed to the continued economic growth and technological leadership of the United States” this is just pure power.

    The US should lead the world’s economy, it is not just because we know how to do business, and respect (mostly) human rights, but because of our respect for democracy. America needs to be strong in order to balance China.

    thanks for what you are doing. I am proud of you guys!

    nicole

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  5. As with most folks in the high tech industry, I have an immense amount of respect for Mr. Chambers. His comments carry a lot of weight, and rightly so.

    Having heard similar comments regarding the repatriation tax in the past, my reaction thus far has been that this repatriation tax, while important, is more of a “cover” for company executives to justify their outsourcing activities to the US population (i.e. “we’d love to create jobs in the US, but we just can’t do it because we can’t bring our profits back to the US for re-investment”), while rewarding the shareholders by achieving the record profits enjoyed by majority of the S&P500 companies in the past 2 quarters due to the resulting lower cost of labor of off-shoring.

    In light of John’s comments, the above cynical view will need to be re-examined. BUT, I’m having a very difficult time squaring the current level of profits of the US Companies (not that there is anything wrong with that, it just tells me that the companies are “happy” with status quo though it’s not PC to say so), the fact that off-shoring trend has been in place for the last 10 years (regardless of which administration or which tax policy), and the fact that innovation is now a global phenomenon and not solely an American competence, and come to the conclusion that the fix (from a US employment perspective) is much more involved than any single act. A structural shift seems to be in order if we want to get the unemployment down to 5%. My humble opinion.

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  6. More Jobs!!! this is the way to go… it will allow people to have more options to choose from…

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  7. I agree that a repatriation holiday for 2011 would be a useful step for stimulating a U.S. economy that continues to lag. As I noted here (www.innovationpolicy.org/time-for-repatriation-easing)if the Fed can do quantitative easing, Congress can and should do “repatriation easing.”

    Rob Atkinson
    President
    Information Technology and Innovation Foundation

       0 likes

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