For U.S. Companies, Money ‘Offshore’ Means Manhattan

But much of that money is already home.

Multinationals based in the United States now hold more than $1.6 trillion in cash classified as “permanently invested overseas.” These funds will face the 35 percent federal corporate tax only if it is returned to the country.

In the convoluted world of corporate tax accounting however, simple concepts like “overseas” and “returned to the country” are not as simple as they appear.

Apple’s $102 billion in offshore profits is actually managed by one of its wholly owned subsidiaries in Reno, Nev., according to the Senate report on the company’s tax avoidance. The money is tracked by Apple company bookkeepers in Austin, Tex. What’s more, the funds are held in bank accounts in New York.

Because the $102 billion is technically assigned to two Irish subsidiaries, however, the United States tax code considers the money to be under foreign control, and Apple is legally entitled to avoid paying taxes on it.

Tax experts say that such an arrangement is not uncommon among American multinationals. During the last several years, major companies like Microsoft, Hewlett-Packard, Google and Abbott Labs have lowered their tax bills by arranging for their billions in profits to flow to subsidiaries that are technically offshore — even though some of the money is placed in United States Treasury bonds and other government securities.

Because the money is nominally held by the offshore companies, the tax code deems the money nontaxable, even if the funds are physically held in the United States. The savings to American companies is huge: the Congressional Joint Committee on Taxation estimated that if foreign profits of United States corporations were fully taxed it would generate an additional $42 billion this year for the government — about half the amount of the automatic spending cuts enacted as part of the so-called sequester.

The companies say that they need to shield their money overseas, however, because the official corporate rate of 35 percent is the highest in the world and puts them at a competitive disadvantage. And while the offshore money may be in American banks and controlled from home, executives say it would be irresponsible to return the money to their shareholders or invest it in the United States because of the high tax rate.

Just last month, Apple announced it would pay for its dividends to shareholders by taking on $17 billion in debt rather than tap into the untaxed foreign profits. Mr. Cook said it would have been a disservice to shareholders to use the “offshore” earnings and pay the 35 percent federal income tax.

But Senator Carl Levin, the Michigan Democrat who heads the committee, brushed aside those claims. “You can bring the money home,” he said. “You’d just have to pay your taxes on it.”

Apple is one of about 20 major corporations that have been pushing for a fresh tax break, known as a “repatriation holiday,” which would allow them to bring the money to the United States at a drastically reduced rate. John T. Chambers, chief executive of Cisco, has led a sustained lobbying effort for such a policy, promising that it would act as a stimulus to encourage investment and increase jobs in the United States.

A similar policy was enacted in 2004, which prompted American companies to return more than $300 billion in foreign earnings at the reduced rate of 5.25 percent. But it led to no discernible increase in American investment or hiring. On the contrary, some of the companies that brought back the most money laid off thousands of workers, and a study by the National Bureau of Economic Research later concluded that 92 cents on every dollar was used for dividends, stock buybacks or executive bonuses. A study by the Congressional Joint Committee on Taxation estimated that a similar program would result in $79 billion in forgone tax revenue over a decade.

Opponents of the repatriation tax break say that Apple’s accounting maneuvers show how easily major companies can shield their profits from the government, even putting companies without aggressive tax departments at a competitive disadvantage.

“The offshore companies are a fiction and the statement that the money is offshore is a fiction,” said Edward D. Kleinbard, former staff director for the Congressional Joint Committee on Taxation. “What they are asking for is a reward for having gamed the system.”

In Wi-Fi-Intoxicated Manhattan, a Generation of Teetotalers

Thus did the three women find themselves in a ground-floor room, bathed in fluorescence, on Thursday at the First Presbyterian Church, in Greenwich Village, just north of Washington Square Park. Every month the church hosts a seminar as part of its Aging Well series, and on this night the topic was “What’s Wi-Fi and Do I Really Need a Smartphone?” New York may be one of the most wired, smartphone addicted-slash-addled cities in the nation, but the pace of the technological leaps has left a lot of older people behind, wondering what they were missing and whether it was worth finding out.

About three dozen people attended, most in their 70s and 80s. Many came armed with answers of their own. Whatever Wi-Fi was, it sounded a little scary, untrustworthy or hopelessly complicated. As for smartphones, they had turned people, body snatcher-like, into distracted drones.

“They’ve dropped out of social intercourse on the street,” said Bob Moran, a 76-year-old mostly retired social worker who owns a dying computer but no cellphone.

Mr. Moran said he cursed out people who chatted on smartphones in restaurants or who texted their way down sidewalks, heads in that telltale bend. “I think it’s going to end badly, this lack of contact in the world,” he said.

Sandy Guzik, 72, proud to own neither a smartphone nor a cellphone, was there “so I can tell people even more about why I don’t want one.”

“People say, ‘What if there’s an emergency?’ I say, ‘There’s nine people around me who have one,’ ” she said. “I’ve never had that emergency, and neither have they.”

“I’ve seen children neglected,” she added darkly. “I’ve seen friends neglected.”

Several others said they were there for the light dinner that was served beforehand — $7 a head for cold cuts on baguettes with tortilla chips, soda, coffee and a pastry. Still, the place really filled in at 6:45 p.m., when the seminar began.

Robert Finkenthal stood before them, a technology trainer at NYU Langone Medical Center who spent six years working at a nonprofit organization that specialized in teaching technology to older people. Many of his elderly students felt fearful or anxious about technology, he said beforehand, or were embarrassed about not being in the digital mainstream. “The worst is not knowing what it is, not knowing how to get there, and knowing that everyone around you is completely hooked in,” Mr. Finkenthal said.

PowerPoint slides glowed on a roll-down screen. Mr. Finkenthal explained what smartphones were, and what the differences between them were, and what apps were.

“Has anybody heard of Angry Birds?” he asked. Murmurs followed. Not one hand went up.

He moved onto Wi-Fi.

“WiFi,” a seminar participant wrote on a pad of paper, adding the phonetic pronunciation for Wi: “Y.”

After an hour and a half, Mr. Finkenthal took questions. Do all smartphones have Internet connections? Is there a way to turn the Internet off? Did he use a headset and was he concerned about radiation? Could you watch an Audrey Hepburn movie on your phone?

Afterward, the Rev. Richard Pease, who organizes the seminars, thanked Mr. Finkenthal, saying, “I’m too old to understand this, but I think it’s great.”

The audience began filtering out. Ms. Guzik said the seminar reinforced her resolve to never get Wi-Fi. The Internet was addictive enough, she said; when she logged on at libraries, whole afternoons vanished.

Ms. Anderson said that when she did get around to buying a computer, she would be sure to get wireless, to obviate the need for wires.

Robert McCarl, 81, found it terrifying that smartphones could pinpoint the user’s location. “They could put a bomb on your head anytime,” he said. Who could? “Your enemies,” he replied. “Your slobbering enemies.” Still, Mr. McCarl deemed Mr. Finkenthal’s presentation “terrific.”

“It was fascinating,” he said as he rose to leave. “But it’s not my generation, so I didn’t know what he was talking about half the time.”

In Wi-Fi-Intoxicated Manhattan, a Generation of Teetotalers

Thus did the three women find themselves in a ground-floor room, bathed in fluorescence, on Thursday at the First Presbyterian Church, in Greenwich Village, just north of Washington Square Park. Every month the church hosts a seminar as part of its Aging Well series, and on this night the topic was “What’s Wi-Fi and Do I Really Need a Smartphone?” New York may be one of the most wired, smartphone addicted-slash-addled cities in the nation, but the pace of the technological leaps has left a lot of older people behind, wondering what they were missing and whether it was worth finding out.

About three dozen people attended, most in their 70s and 80s. Many came armed with answers of their own. Whatever Wi-Fi was, it sounded a little scary, untrustworthy or hopelessly complicated. As for smartphones, they had turned people, body snatcher-like, into distracted drones.

“They’ve dropped out of social intercourse on the street,” said Bob Moran, a 76-year-old mostly retired social worker who owns a dying computer but no cellphone.

Mr. Moran said he cursed out people who chatted on smartphones in restaurants or who texted their way down sidewalks, heads in that telltale bend. “I think it’s going to end badly, this lack of contact in the world,” he said.

Sandy Guzik, 72, proud to own neither a smartphone nor a cellphone, was there “so I can tell people even more about why I don’t want one.”

“People say, ‘What if there’s an emergency?’ I say, ‘There’s nine people around me who have one,’ ” she said. “I’ve never had that emergency, and neither have they.”

“I’ve seen children neglected,” she added darkly. “I’ve seen friends neglected.”

Several others said they were there for the light dinner that was served beforehand — $7 a head for cold cuts on baguettes with tortilla chips, soda, coffee and a pastry. Still, the place really filled in at 6:45 p.m., when the seminar began.

Robert Finkenthal stood before them, a technology trainer at NYU Langone Medical Center who spent six years working at a nonprofit organization that specialized in teaching technology to older people. Many of his elderly students felt fearful or anxious about technology, he said beforehand, or were embarrassed about not being in the digital mainstream. “The worst is not knowing what it is, not knowing how to get there, and knowing that everyone around you is completely hooked in,” Mr. Finkenthal said.

PowerPoint slides glowed on a roll-down screen. Mr. Finkenthal explained what smartphones were, and what the differences between them were, and what apps were.

“Has anybody heard of Angry Birds?” he asked. Murmurs followed. Not one hand went up.

He moved onto Wi-Fi.

“WiFi,” a seminar participant wrote on a pad of paper, adding the phonetic pronunciation for Wi: “Y.”

After an hour and a half, Mr. Finkenthal took questions. Do all smartphones have Internet connections? Is there a way to turn the Internet off? Did he use a headset and was he concerned about radiation? Could you watch an Audrey Hepburn movie on your phone?

Afterward, the Rev. Richard Pease, who organizes the seminars, thanked Mr. Finkenthal, saying, “I’m too old to understand this, but I think it’s great.”

The audience began filtering out. Ms. Guzik said the seminar reinforced her resolve to never get Wi-Fi. The Internet was addictive enough, she said; when she logged on at libraries, whole afternoons vanished.

Ms. Anderson said that when she did get around to buying a computer, she would be sure to get wireless, to obviate the need for wires.

Robert McCarl, 81, found it terrifying that smartphones could pinpoint the user’s location. “They could put a bomb on your head anytime,” he said. Who could? “Your enemies,” he replied. “Your slobbering enemies.” Still, Mr. McCarl deemed Mr. Finkenthal’s presentation “terrific.”

“It was fascinating,” he said as he rose to leave. “But it’s not my generation, so I didn’t know what he was talking about half the time.”