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Why tech companies are spending so much to lobby the U.S. government on tax reform

You have to spend money to make money.

For the likes of Apple, Microsoft and Google, their approach to Washington, D.C., is straightforward: They’re willing to spend money to make money — at a lower tax rate.

The industry’s record lobbying spending in the second quarter of 2017 — disclosed in federal ethics forms filed Friday — reflects a widespread desire for reforms to U.S. tax laws, including changes that might make it cheaper for them to bring back billions of dollars that they’ve long kept overseas.

Five of the country’s largest tech companies — Apple, Microsoft, Google, Cisco and Oracle — together have about $512 billion in cash parked abroad, according to an analysis by Moody’s released this week. That money remains on foreign shores because companies generally don’t want to pay a 35 percent tax for returning — repatriating — those earnings.

Tech companies with cash overseas

To that end, tech companies and other businesses have for years lobbied in Washington in pursuit of lower tax bills, including reforms that would reduce — or potentially suspend — the tax that applies to repatriated corporate cash. And they’ve picked up their pace in recent months, as President Donald Trump and his administration consider the issue. There’s even talk of trying to lower the rate to 10 percent.

Companies like Amazon, Apple and Google, which spent record sums lobbying the federal government between April 1 and June 30, specifically focused some of those dollars on pushing for changes to the U.S. tax code, their federal lobbying disclosures reflect.

Some of the industry’s leading lobbying associations, meanwhile, huddled last month at a private meeting with Gary Cohn, Trump's leading economic adviser, and Steve Mnuchin, the president's Treasury secretary, to talk tax reform, sources previously told Recode.

Still, Trump has yet to release a final tax reform plan. His current attempt to move another piece of major legislation — health care reform — has proven politically perilous. And tax reform long has eluded congressional lawmakers, even though both Republicans and Democrats speak openly about the need to rethink the rates that apply to individuals and corporations.

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