Corning Inc. overseas profits become campaign issue
CORNING — Corning Inc.’s handling of profits it earns overseas has quickly become an issue in the 2016 presidential campaign.
The Fortune 500 company’s refusal to bring back to the U.S. more than $12.4 billion in overseas profits first drew criticism from U.S. Sen. Bernie Sanders, an independent from Vermont.
Sanders, a candidate for the Democratic nomination, issued a report earlier this year that also criticized Corning Inc. and 110 other companies for maintaining subsidiaries in offshore tax havens.
If the Twin Tiers’ largest employer “repatriated” the $12.4 billion, it would theoretically owe $4.3 billion in U.S. federal taxes. That could be reduced by any taxes paid on the profits in other countries.
A movement to allow U.S. companies to bring home overseas profits without paying the full 35 percent U.S. corporate tax rate got a boost last week.
Leading Republican presidential candidate Donald Trump said during a speech in Dallas that he would make repatriation of funds a priority to stimulate the U.S. economy.
American companies, including Corning Inc., have more than $2 trillion in overseas profits stashed away in foreign accounts. No U.S. taxes have been paid on those funds.
Most of Corning’s foreign operations are in Asia, including China, Taiwan, Korea, India, Japan and the Philippines. The company also has facilities in Russia, Turkey, the United Kingdom, Denmark, France, Germany, Hungary, Netherlands, Poland and Switzerland.
It also maintains manufacturing locations in South Africa and Brazil.
President Barack Obama has proposed allowing U.S. companies to repatriate some foreign profits at a tax rate of 14 percent, but Congress has not acted on the plan.
There appears to be little chance of legislation to encourage repatriation before a new president takes office in January 2017.
What would Corning Inc. do with the overseas profits if it brought them back to the U.S.? The company hasn’t said, but a number of other companies have already set the pattern for use of such money.
Companies such as eBay, VeriSign Inc. and Stryker Corp. are using such funds for stock buybacks, capital improvements and daily operations.
General Electric, which is bringing back $36 billion, will use the funds to help divest the company of subsidiary GE Capital. It will pay about $6 billion in U.S. taxes.
Increasing dividends is another option, because stockholders have not participated in profits that are held offshore.
The $12.4 billion held offshore dwarfs Corning Inc.’s reported U.S. cash reserves of about $5 billion.