How the high corporate tax rate pushes U.S. companies to stash their cash overseas

General Electric, Whirlpool, and other mega-companies are sitting on gigantic piles of money. And they're storing those piles in other countries

Jeffrey Immelt's General Electric keeps only $30.7 billion of its $85.5 billion in cash reserves in the U.S.
(Image credit: Chip Somodevilla/Getty Images)

Amidst all the partisan rancor surrounding the fiscal cliff, there is one budgetary issue on which both Democrats and Republicans largely find themselves in agreement: The corporate tax rate is too damn high. At 35 percent, it is one of the highest corporate rates in the developed world, and President Obama has proposed reducing it to 28 percent as part of a larger overhaul of the tax code. Reform is widely considered necessary because the current set-up "presents the worst of all worlds," say Jia Lynn Yang and Suzy Khimm at The Washington Post. "Rates that are relatively high and tax receipts that are too low."

Why is tax revenue so low? Because the high rate has pushed America's largest corporations to park their cash overseas. "At a time when American companies hold near record amounts of cash, many are surprisingly cash-poor at home," says Kate Linebaugh at The Wall Street Journal.

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Ryu Spaeth

Ryu Spaeth is deputy editor at TheWeek.com. Follow him on Twitter.