Home Guy wrote:

With regard to corporate profits, the report noted that the
preliminary estimate for the first quarter of 2011 was $1.668
trillion, an increase of $465 billion of just under 40 percent
since the recovery began.

On a related note:

Microsoft, Apple, Google ask Congress for tax holiday
http://blog.seattlepi.com/microsoft/...r-tax-holiday/

Microsoft is among several U.S. corporations, including Apple and
Google, that are lobbying Congress for a year-long income tax holiday
that would allow them to transfer offshore cash to the United States at
a lower tax rate, The New York Times reports.

Microsoft has $29 billion in offshore cash, for example, and is paying
the $8.5 billion for Luxembourg-based Skype with offshore funds. The
companies are asking for a one-year rate reduction on international
revenue from 35 percent to 5.25 percent, saying the break would inject
much-needed trillions into the U.S. economy, the Times reports.

However, the newspaper points out, the Bush administration offered a
similar tax holiday in 2005, and 92 percent of the money was returned to
shareholders. A study by the National Bureau of Economic Research found
the program “did not increase domestic investment, employment or
research and development.

====================

http://www.nytimes.com/2011/06/20/bu...x.html?_r=3&hp

“For every billion dollars that we invest, that creates 15,000 to 20,000
jobs either directly or indirectly,” Jim Rogers, the chief of Duke
Energy, said at the conference. Duke has $1.3 billion in profits
overseas.

But that’s not how it worked last time. Congress and the Bush
administration offered companies a similar tax incentive, in 2005, in
hopes of spurring domestic hiring and investment, and 800 took
advantage.

Though the tax break lured them into bringing $312 billion back to the
United States, 92 percent of that money was returned to shareholders in
the form of dividends and stock buybacks, according to a study by the
nonpartisan National Bureau of Economic Research.

This money comes from overseas operations and in some cases accounting
maneuvers that shift domestic profits to low-tax countries. The study
concluded that the program “did not increase domestic investment,
employment or research and development.”

Indeed, 60 percent of the benefits went to just 15 of the largest United
States multinational companies — many of which laid off domestic
workers, closed plants and shifted even more of their profits and
resources abroad in hopes of cashing in on the next repatriation
holiday.

Merck, the pharmaceutical giant based in Whitehouse Station, N.J., was
one of those big winners. The company brought home $15.9 billion, second
overall to Pfizer’s $37 billion. It used the money for “U.S.-based
research and development spending, capital investments in U.S. plants,
and salaries and wages for the U.S.,” a Merck spokesman, Steven
Campanini, said last week.

According to regulatory filings, though, the company cut its work force
and capital spending in this country in the three years that followed.

Merck used the cash infusion to continue paying dividends and buying
back stock for the benefit of shareholders and executives — even as it
was rocked by more than $8 billion in costs to settle a variety of
disputes after executive missteps. Merck had to pay billions in back
taxes to the I.R.S.; billions more to consumers suing because of the
dangerous side effects of the painkiller Vioxx, and hundreds of millions
to the Justice Department, which had accused the company of defrauding
Medicare.

The tax break, part of the American Jobs Creation Act, lacked safeguards
to ensure the companies used the money for investment and job creation
in the United States, as Congress intended. “There were no direct
tracing requirements,” said Jay B. Schwartz, head of Merck’s
international tax unit until 2006. “So once the money came home, it gave
you great flexibility.”