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A territorial tax system taxes only revenue earned domestically. Only a few countries, such as France, have such a system. The progressive Institute for Policy Studies came out with a study this month stating that a conservative organization, Fix the Debt, is campaigning for a territorial tax for the United States. The institute says that if the country goes to a territorial tax, 59 companies, including San Diego's Qualcomm, will get a collective $173 billion in immediate tax windfalls. Heatedly, Fix the Debt denied that it had ever taken a position on the territorial tax. The institute came right back and showed how Fix the Debt last year had posted a PowerPoint indicating its support for a territorial tax. The institute also quoted Paul Jacobs, Qualcomm chief executive and a member of the Fix the Debt steering committee, saying "One of the things that's always bothered me is that we don't have a territorial tax system."

Personally, I agree with the institute's attack on the territorial tax, and its attack on companies that stash its profits overseas to avoid United States taxes. However, I can fully understand why Jacobs wants a territorial tax: according to the company's latest 10-K filing to the Securities and Exchange Commission, Qualcomm gets 95% of its revenue from abroad. Jacobs is paid to push for matters that are in the company's interest. A territorial tax would be good for Qualcomm, although in my opinion it would be disastrous for the U.S.

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Comments

Burwell June 28, 2013 @ 6:35 p.m.

Jacobs can claim that Qualcomm earns most of its money offshore, but it is not true. Qualcomm manufactures chips in foreign countries that are sold to foreign vendors who manufacture cell phones and other devices that are sold in the U.S. The fact is, most of the products Qualcomm manufactures and sells overseas wind up being resold as completed products in the U.S.

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Don Bauder June 28, 2013 @ 8:38 p.m.

Burwell: You may well be right. I have not seen figures on how much of the product eventually ends up on the U.S. market. Possibly it's in the 10-K. Maybe I should have read it more carefully. It would also depend on whether the law and financial regulatory bodies permit the company to say that 95% of its revenue comes from abroad. Best, Don Bauder

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Don Bauder June 29, 2013 @ 8:55 a.m.

Murphyjunk: Jacobs's $20 million annual pay package has an odor to it. Best, Don Bauder

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