“Repatriation”: Another Corporate/Republican Hustleby Art Jacobson on Oct. 30, 2011, under Capitalism, Class War, Occupy Wall Street, Politics, Repatriation
Remember the old saying, “Fool me once, shame on you; fool me twice shame on me ?” Well, the corporations want to fool us again. Don’t let them do it.
There is a move afoot to “repatriate” huge sums of money currently held overseas by US-based multi-national corporations. Under US tax law those funds are not taxed until they’re brought back to the United States.
Congressional leaders and our wealthiest corporations want some help in bringing home the bacon. They are aggressively lobbying to bring those funds home for the modest tax rate of 5.2, rather than the usual 35 percent corporate tax rate.
The Center on Budget and Policy Priorities (CBPP) explains the effect of permanently deferring taxes on overseas holdings:
“This effectively allows such firms to defer payment of the U.S. corporate income tax on their overseas profits indefinitely, even though they may obtain an immediate tax deduction for many expenses incurred in supporting the same overseas investments. This can produce a negative U.S. corporate income tax—that is, a net government subsidy—for overseas operations. In addition to causing the federal government to lose tax revenue, this structure gives multinationals a significant incentive to shift economic activity—as well as their reported profits—overseas.
The argument for repatriation is that this would bring back billions of dollars to the US, which would then be virtuously employed to create jobs. Sure it would. We’ve been there and done that under a 2004 Bush Administration plan.
As CBPP points out,
“The evidence shows that firms mostly used the repatriated earnings not to invest in U.S. jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders. Moreover, many firms actually laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders.” Many economists and scholars believe that if corporations get their way and get another repatriation holiday, history will repeat itself—and once again the corporations and their shareholders, not American workers, families, and children, will be the only winners.”