HP Grabs $14.5B Job Creation Tax Break As It Celebrates Layoffs

from the how-does-that-work? dept

theodp writes “As long as Congress is PO’ed at HP for blowing privacy smoke up its ass, perhaps they should take a look at today’s 10-Q SEC filing, in which HP boasts that it: 1) ‘Repatriated $14.5 billion under the provisions of the Jobs Creation Act of 2004,’ 2) Reaped additional ‘savings from our workforce reductions,’ and 3) Expects more savings from ‘subsequent headcount reductions ‘ that will further curtail pension and medical liabilities. With ‘Job Creators’ like this, who needs Chainsaw Al?”


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Comments on “HP Grabs $14.5B Job Creation Tax Break As It Celebrates Layoffs”

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15 Comments
Sanguine Dream says:

Wow...

I understand that the timing looks bad but damn. I’m sure HP was working to comply with the Job Creation Act of 2004 since 2004 and they just got their reward for it. It just happens that they are now setting plans in to motion for layoffs. So while it would be easy to accuse them of created the jobs for the sole purpose of laying them off after they get the reward I doubt it really went down like that.

Jason says:

Re: Wow...

“It just happens that they are now setting plans in to motion for layoffs.”

Not exactly. I have worked for HP for 7 years. They have been laying off… er wait… the proper term is WFR (workforce reduction) for at last 6 of those years. Every month or two another team will get whacked and 4 or 5 or 6 people will be gone. Has been going on like that for as long as any of us can remember.

You can well imagine just how wonderful the morale is around here. There have been no hirings. No raises. No company performance bonuses. Just the ever looming spectre of more WFRs.

For the record, I am looking elsewhere for work. If anyone needs a ColdFusion Web Developer, let me know.

Anonymous Coward says:

I agree. She should be investigated. Her salary is more than likely tied to savings. If she inflates costs then suddenly finds a way to reduce all these costs through a loophole in the law (that was meant to create jobs.. not eliminate them) then its possible the whole ordeal warrants an investigation.

Then again.. between King Bush and Congress.. who’s to say they aren’t being paid too? Maybe their line item in HP’s budget is tied to our “representatives” voting record? What’s the going rate for a senator these days? Anybody know?

Anonymous Coward says:

It's not really a "tax break."

The $14.5 billion in cash was the amount of HP’s own cash that they moved back into the US from where it’s stashed overseas at various HP divisions. The actual tax break (in other words, how many fewer dollars they send to the government) might be closer to $1 billion or so, not the $14.5 billion number. The idea is to get cash from foreign bank accounts to the US bank accounts. Then US banks can use it to loan against. Those $14.5 billion can be used to loan on the order of $150 billion into the US economy when it’s deposited into a US bank, where it puts $0 into the US economy when it’s deposited overseas.

If the government can essentially “pay” 1% of the $150 billion that gets into the economy in the form of a one-time tax break to get people to move that money from overseas, that’s way cheaper than paying 5.5% per year for 10 years to issue $150 billion in new Treasury debt to loan to the banks via the Federal Reserve System.

Note this is not a partisan political comment, but a comment from a financial analyst who’s seen this happen with other companies.

Ivory Bill says:

Re: It's not really a "tax break."

Not really a tax break?
The only reason that these earnings stayed offshore to begin with is because it was deemed too expensive to repatriate them at ordinary tax rates.
The fact that the tax break is designed to lead to desirable consequences (in this case, in increase in the US credit limit) used to be the reason that tax breaks were enacted — to encourage behavior deemed desirable by Congress. But its still a tax break.
(From in International Tax CPA who has seen this happen more than once).

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