9 p.m., July 27
Territorial tax? Qualcomm is in the middle of storm
Company denounced, but almost all its revenue comes from abroad
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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