In 2004, corporate lobbyists successfully lobbied for a doozy of a corporate tax break--after already getting years of tax deferral on their offshore profits (often profits that should have been taxed in the US, for which companies had dreamed up transfer pricing schemes to move the profits offshore, such as selling IT properties to their offshore subsidiaries at a claimed third-party comparable price, even though they would NEVER really sell it to any third party so it was truly priceless), they got added to the deferral tax break a near-zero 'repatriation' tax break. As CTJ notes (see below) this was a downright ridiculous reward to the very corporate tax dodgers who had intentionally kept profits offshore to keep from paying tax and then paid an army of lobbyists to get them the tax break they wanted to bring it back.
The republicans in control of the House and Presidency at the time claimed it would be a big job booster--they even named the disastrous bill that enacted that and myriad other corporate tax breaks (the wish list that corporations had been vying for going on 20 years) the "American Job Creation Act". HAH! The joke was on Congress and the workers who bore the brunt of the job cutting by these same corporate giants. Of course, the bill did nothing of the sort. Some of the biggest repatriation dollars went to share buybacks (ie, benefited the wealthiest amongst us that make up the investor class) while tens of thousands of workers were laid off. Hewlett-Packard was a prime example.
Repatriation was a flop,that is, for everybody except the managerws and wealthy investors who own most of the financial assets in the country and are pushing the corporatist agenda that is dominating the GOP and much of the blue-dog Dems these days. Repatriation lost money in gobs for the Treasury, adding to the deficit. It cost jobs, since the multinationals are all thinking short-term profits that can most easily (lazily) be achieved by cutting workers and getting big share prices. It supported the continuing 12% growth rate in CEO pay while the workers' pay stagnates or declines. It had a negative impact on the future rate of offshoring of profits, since even the 'good guy' companies saw the benefit to the 'bad guy' companies that had hoarded profits abroad, and the measurable result of the 2004 repatriation holidy was even more hoarding abroad. Those hoarders are now demanding their (nearly) tax-free repatriation of their hoard. Congress and Obama would be fools if they give it to them.
It hasn't got anything to do with having enough money to invest in expansion of the business. There's cash floating around multinationals in the US as well as abroad, cash that they aren't using to reinvest. they won't use the additional cash to reinvest either. They'll pay it out to shareholders, who are much more likely to take their payment on their secondary-market purchased shares and buy emerging market shares than they are to fund a venture capitalist firm or a startup entrepreneurial firm or buy shares in an IPO of an entrepreneurial firm. Remember, ONLY directly purchased shares from a company go to aid that company's ability to expand its business. Secondary market purchases of shares just trade cash flows between rich guys.
Citizens for Tax Justice is trying to spearhead a citizens' campaign to tell Congress to say no to the corporate lobbyists on this issue. Reprinted below is the CTJ release. Read it. Call your senators and representatives and tell them not to be stupid. Ultimately, the people in this country are going to realize that selling the economy to multinationals who lay off workers without a qualm is not good for workers and is not good for the economy.
Call Lawmakers to Oppose the Amnesty for Corporate Tax Dodgers
Call both your Senators and your member of the House of Representatives at the toll-free number below and tell them:
“Oppose the amnesty for corporate tax dodgers, which corporate leaders call a ‘repatriation holiday.’ This giveaway to corporations should not be part of the deal on raising the debt ceiling or any other legislation.”
Call this number to be connected to your members of Congress.
Here’s why this is important.
A “repatriation holiday,” which has been proposed by some Republicans and Democrats in Congress, would remove all or almost all U.S. taxes on the profits that U.S. corporations bring back to the U.S. from other countries, including profits that they shifted to offshore tax havens using accounting gimmicks and transactions that only exist on paper.
If you want to give your lawmakers’ staffs more information, you can also tell them that:
1. Another repatriation holiday will cost the U.S. $79 billion in tax revenue according to the non-partisan Joint Committee on Taxation.
2. Another repatriation holiday will cost the U.S. jobs because it will encourage corporations to shift even more investment offshore.
3. The repatriation holiday is an amnesty for corporate tax dodgers because those corporations that shift profits into tax havens benefit the most from it.
4. Congress enacted a repatriation holiday in 2004, and the benefits went to dividend payments for corporate shareholders rather than job creation, according to the non-partisan Congressional Research Service. Many of the corporations that benefited actually reduced their U.S. workforce.
For more information, see the recent post from Citizens for Tax Justice on one senator’s repeated flip-flops related to the repatriation holiday.
Thanks to AFSCME for providing the toll-free number to enable constituents to get in touch with their members of Congress regarding this critical issue.