{"id":2112,"date":"2008-06-24T07:53:44","date_gmt":"2008-06-24T11:53:44","guid":{"rendered":"http:\/\/chimeraobscura.com\/vm\/?p=2112"},"modified":"2008-06-24T07:53:44","modified_gmt":"2008-06-24T11:53:44","slug":"creative-creation","status":"publish","type":"post","link":"http:\/\/chimeraobscura.com\/vm\/creative-creation","title":{"rendered":"Creative Creation?"},"content":{"rendered":"

A few years ago, I wrote about the American Jobs Creation Act (here<\/a> and here<\/a>), a bill passed in 2004 that permitted U.S. companies to repatriate overseas funds at a reduced tax rate (essentially 5.25%). It was a one-time act, and made some sense, given that the U.S. has one of the largest corporate tax rates in the world (essentially 35%). The joke I discovered about “jobs creation” was that, in the pharma business, this act overlapped with the onset of massive layoffs in this industry.<\/p>\n

Today, the NYTimes writes about the bill<\/a>, how the amount of money that came back to the U.S. was 50% higher than government estimates ($312 billion to $200 billion), and how the tax revenues generated were six times higher than a congressional committee anticipated ($18 billion to $2.6 billion). It’s great that tax revenues got a big boost, but the it looks like the biggest “creation” was in the creative accounting department.<\/p>\n

Companies were told by the government that the repatriated funds had to be dedicated to R&D, employment, and other “jobs creation”-y domestic investments. Of course, there was no provision stating that funds previously allocated to those needs couldn’t be shifted away to other activities.<\/p>\n

“It basically worked out to be one big giveaway,” said Robert Willens, a tax and accounting authority in New York. “The law never took into account the fact that money is fungible.”<\/p>\n

Mr. Willens said while companies did make investments in their domestic operations, the repatriated money also freed up a corresponding amount of cash to pay out to shareholders or buy back stock \u00e2\u20ac\u201d moves that do not generate job growth or investments. “We know that a lot of stock was retired during this time,” he said.<\/p><\/blockquote>\n

While you read all about it<\/a>, I’ll get back to last year’s financials and letcha know what neat accounting tricks I come across.<\/p>\n","protected":false},"excerpt":{"rendered":"

A few years ago, I wrote about the American Jobs Creation Act (here and here), a bill passed in 2004 that permitted U.S. companies to repatriate overseas funds at a reduced tax rate (essentially 5.25%). It was a one-time act, and made some sense, given that the U.S. has one of the largest corporate tax … <\/p>\n

Continue reading “Creative Creation?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[27,12],"tags":[],"class_list":["post-2112","post","type-post","status-publish","format-standard","hentry","category-big-business","category-pharmaceuticals"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p4C7K-y4","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":586,"url":"http:\/\/chimeraobscura.com\/vm\/american-job-destruction-act","url_meta":{"origin":2112,"position":0},"title":"American Job Destruction Act","author":"Gil","date":"July 25, 2005","format":false,"excerpt":"When I write my annual Top 20 Pharma Companies & Top 10 Biopharma Companies report (this year's edition is soon to post at the website of my day job), I read a lot of annual reports, along with industry analysis, news coverage, and other neat sources. The annual reports have\u2026","rel":"","context":"In "Pharmaceuticals"","block_context":{"text":"Pharmaceuticals","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business\/pharmaceuticals"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":910,"url":"http:\/\/chimeraobscura.com\/vm\/more-on-job-destruction","url_meta":{"origin":2112,"position":1},"title":"More on Job Destruction","author":"Gil","date":"April 16, 2006","format":false,"excerpt":"Last July, I wrote about the nuttiness of the American Jobs Creation Act, a one-time tax break for companies bringing overseas profits back to the U.S. (the tax rate on such earnings drops from about 38% to about 5%). 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At the time, I was irate over the fact that the White House hid $134 billion in\u2026","rel":"","context":"In "Pharmaceuticals"","block_context":{"text":"Pharmaceuticals","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business\/pharmaceuticals"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1539,"url":"http:\/\/chimeraobscura.com\/vm\/utilitarianism","url_meta":{"origin":2112,"position":3},"title":"Utilitarianism","author":"Gil","date":"June 6, 2007","format":false,"excerpt":"Every summer, when we get rolling on the annual Top 20 Pharma \/ Top 10 Biopharma report, my trusty associate editor compiles pipeline information for the past year. While I suss out sales figures and try to parse the arcana of accounting, she puts together lists of new drugs that\u2026","rel":"","context":"In "Big Business"","block_context":{"text":"Big Business","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1019,"url":"http:\/\/chimeraobscura.com\/vm\/pfed","url_meta":{"origin":2112,"position":4},"title":"Pf***ed","author":"Gil","date":"July 7, 2006","format":false,"excerpt":"Sorry for the lack of posts, readers! I'm really busy on the home-stretch of that Top Companies special issue. Gotta finish the final profile today, so's I can head to the shore tomorrow without worrying about it. I decided to save the biggest one for last: Pfizer. 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