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Citi, BofA Cut Workers After US Tax Holiday-Report
Report singles out 10 companies for cutting jobs
Ten major U.S. corporations, including big banks Citigroup Inc and Bank of America Corp, laid off workers after enjoying a tax holiday in 2004-2005 that had been billed as a form of economic stimulus, said a report released on Tuesday.
With large multinational companies today pressing Congress for another tax holiday, the Institute for Policy Studies reported that the last one did not fulfill its rosy promises for hundreds of thousands of U.S. workers.
Fifty-eight corporations that accounted for 70 percent of overseas profits repatriated under the 2004-2005 tax break collectively saved $64 billion in taxes, then cut 600,000 jobs through layoffs, the report said.
It is the latest in a series of warring studies on whether U.S. multinationals should be allowed, for the second time, to bring home hundreds of billions of dollars in overseas profits at a bargain-basement tax rate.
Large companies are lobbying again for such a tax break, which would let them repatriate much if not all of an estimated $1.5 trillion in overseas profits for well below the full 35-percent corporate income tax rate.
Legislation in the Republican-controlled U.S. House of Representatives would let them repatriate those profits at 5.25 percent, the same tax rate given to them under a similar tax holiday during the Bush administration.
Just as they are doing now, companies six years ago said that the repatriation tax break would boost jobs and the economy. But the institute said this did not happen, as earlier academic studies have also found.
"History shows that many 'tax holiday' companies use repatriated profits to reward executives and other shareholders, then lay off workers. Corporate tax holidays have resulted in precious few U.S. jobs," said Chuck Collins, co-author of the report from the left-leaning institute.
Besides Citi and Bank of America, the report focuses on technology group Hewlett-Packard, drugmakers Pfizer Inc and Merck & Co Inc, and manufacturers Ford Motor Co and Caterpillar Inc.
Telecom giant Verizon Communications Inc and chemical makers Dow Chemical Co, and DuPont are also singled out as corporations that "benefited the most financially from the tax holiday and slashed the most jobs."
The U.S. Senate Permanent Subcommittee on Investigations is looking into the results of the 2004-2005 tax holiday as well. A report from the panel is expected within a few weeks, its chairman, Democrat Carl Levin, told Reuters last month.
In 2004-2005, 843 corporations brought home $362 billion in overseas income at a 5.25-percent tax rate. Analysts said that experience encouraged companies to park more income overseas, allowing them to postpone indefinitely paying any U.S. income tax on it, as long as the money stays abroad.
With the economy struggling and new government stimulus hard to come by, a well-financed corporate lobbying campaign -- organized under the WIN America coalition -- is arguing that another tax holiday would boost the economy.
As reported by Reuters in August, the coalition has hired dozens of former congressional tax-writing committee staffers.
The New Democrat Network, a centrist group, issued a report in August saying an overseas tax repatriation holiday would bring new net revenue into the U.S. Treasury.
At a time of soaring government deficits, the Joint Committee on Taxation, a nonpartisan congressional research arm, has estimated that a tax holiday, like the one proposed in the House and favored by WIN America, would eventually cost taxpayers about $78.7 billion over the next decade.
(Reporting by Kevin Drawbaugh, editing by Bernard Orr)
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26 Comments so far
Show AllShit! Just have Bernanke print more three dollar bills! Reagan's picture on one side and W's on the other! Give Oblahblah a stack of them. He can light his cigarettes with them!
Screw the corporations. Tariff the living CRAP out of their foreign made products. About a 200% one should be about right. If they want to screw us for jobs, destroy our economy for their own profit margins, and THEN sell us cheap crap made elsewhere, then it should COST them to do so. Take away their FREE profits at OUR expense, and we will see some things change.
No tax holidays PERIOD. They haven't played fair since the right took over in the 1980s. Time for them to pay up for the free ride they have gotten for the last 3 decades.
That is a good idea. Use Tariffs to tax them.
"The New Democrat Network, a centrist group, issued a report in August saying an overseas tax repatriation holiday would bring a new net revenue into the U.S. Treasury." Did you read that carefully? This bunch of Democrats is saying it would be great to allow the big transnational corporations to have a nice tax holiday. Sound good to you? Do you want to lower the tax expenses of large corporations? Most likely you would say "NO! Make them pay taxes like the rest of us do!" Yes, that would put you in the 99%. You want the corporations to pay taxes. But what about the Democrats? Are they speaking for you? The Democrats approve the endless wars. The Democrats did not support Medicare for all. The Democrats gave us NAFTA and the loss of our jobs. The Democrats gave us banking deregulation and the end of Welfare. The Democrats agree to give trillions of dollars with no strings attached to the Wall St. banksters. The Democrats support austerity with the massive cuts in all of our domestic programs. Is this what you want?
Then why do you continue to vote for Democrats? You think they will change? You think they will give up the billions of dollars in bribes they get from the corporations? You think they will end the wars? Tax the rich? Care for the people? Think they will vote to maintain and expand regulations to protect the environment and slow down the climate change? Good grief! Get a clue! We already had 'hope and change' without either of these things happening. Face it. The Democrats don't give a rolling donut for the fate of working people in our nation. Franklin Delano Roosevelt is dead and Obama is happy the New Deal has been destroyed. This collapse of the standard of living for working Americans was a JOINT EFFORT of both major political parties. There is no lesser evil. You must stop giving these corrupt political parties the semblance of legitimacy by voting for them. Don't vote D. Don't vote R.
The Republicans are seeking in every garbage dump in the nation to fine even more foul a candidate so that people will say, "I have to stick with Obama! The Republicans are sooooooooo bad." You can, and should, vote for independent candidates who will listen to you and not the corrupt leaders of the two headed corporate party---one head a donkey and the other an elephant. Or maybe it is the two hind ends of these animals with no head (or ethics) at all.
"It is the latest in a series of warring studies on whether U.S. multinationals should be allowed, for the second time, to bring home hundreds of billions of dollars in overseas profits at a bargain-basement tax rate."
Man, are the elites trying to provoke a worldwide revolution? They make their profits overseas where they can kill labor leaders and pollute with impunity, then try to bring their profits back to the US. At some point, American workers may see beyond just trying to keep jobs here, and recognize their common cause with workers around the world. I don't like think about how ugly it could get after that, but I'm afraid we may soon find out.
SSJJ - "Man, are the elites trying to provoke a worldwide revolution? They make their profits overseas where they can kill labor leaders and pollute with impunity, then try to bring their profits back to the US. At some point, American workers may see beyond just trying to keep jobs here, and recognize their common cause with workers around the world. I don't like think about how ugly it could get after that, but I'm afraid we may soon find out."
I'm sorry to say but, it won't happen. Don't forget, we had the Wobblies (those goddamned anarchists again) trying to organize the working man into a common bond with their foreign counterparts, for ages. Meanwhile, TPTB, our common rulers, used the Red scare, fear of foreigners and every other piece of shit propaganda technique to scare Amerikan workers into falling in line. It worked before and, all it would take for it to work again is a little legislation (like the Buffett tax or some other 'bone' they throw to us) and some more spin. Amerikans would eat it up. As long as we buy into the Amerikan mythos of "we're number one", we'll never stand up for all the other poor fuckers on Earth. I hate to be a Melancholy Molly but, anyone believing the revolution will start here, is delusional.
I personally believe that Amerikans won't fight the rich because, secretly, in our heart of hearts, we still believe the myth that, if we work hard, pay attention and get lucky, we too can be those same rich bastards. We don't want to potentially be bound by those same strictures when we become 'rich' so, we don't fight them. Until we see the bullshit behind the myth, we won't stand up en masse.
"[W}e still believe the myth that, if we work hard, pay attention and get lucky, we too can be those same rich bastards. We don't want to potentially be bound by those same strictures when we become 'rich' so, we don't fight them."
I think you're right about this. Even here at CD, we read a lot about "restoring the American Dream", as if the rest of the world is just an afterthought.
Most American workers will never acknowledge other workers in the rest of the world are just like them. Nor will they ever seek to question why corporations that they subsidize and protect take their jobs overseas. It's like never questioning why farmers and businesses chose to employ migrant workers over local labor.
Write to your rep:
BAN LOBBYING, LEGALIZED BRIBERY!
Write to your rep! Ha ha ha! Best laugh I've had all week. Thanks for the joke. You should consider stand up comedy as a career.
How many failed experiments do there have to be?
We've waited decades to see the wealth trickle down. It hasn't.
When exactly does someone throw up their hands and say "It doesn't work!!"? How many tax breaks does it take to create one job? The same number as it takes for "idiots to screw in a new energy efficient light bulb?"
Are we all waiting for another Enron moment? Wasn't BP and the Gulf an eye opener? Do we need a Fukisama here in the US? Wasn't the 2008 meltdown and the mini corrction enough? Have we done anything to prevent them in the future? Am I the only one that remembers that anomaly after the bailout? The one that absorbed more of peoples' savings and never had to explain why it happenned. Anyone remember the "Flash Crash"? Blame it on Ireland and Greece, let's never place the blame where it really belongs.
"Fifty-eight corporations that accounted for 70 percent of overseas profits repatriated under the 2004-2005 tax break collectively saved $64 billion in taxes, then cut 600,000 jobs through layoffs, the report said".........."History shows that many 'tax holiday' companies use repatriated profits to reward executives and other shareholders, then lay off workers."
Yup! Another win for the all the a$$holes who want to turn Americans into serfs. The good news is that they're all going to lose their stolen fortunes in the end!
F**k-em all!
"The good news is that they're all going to lose their stolen fortunes in the end! F**k-em all! .."
And what makes you think they are going to lose anything? I've seen nothing to make me think that. If anything they can and will expect another tax holiday. They've paid to guarrantee that outcome.
They'll all go down when the Euro and the Dollar collapse. The IMF, World Bank and Bank for International Settlements are preparing for the inevitable. All of us who don't hold hard assets are going to lose!
Economics 101 tells us that you can't cure debt with more debt. You can't kick the can down the road forever. Remember Ancient Rome?
gardenernorcal,
Check out this video by Mike Maloney: http://goldsilver.com/the-debt-collapse-and-why-gold-silver-are-rising/?utm_source=Invertise&utm_medium=Banner%2BAd&utm_campaign=Debt%2BDeflation. He is not alone in his analysis!
"Fifty-eight corporations that accounted for 70 percent of overseas profits repatriated under the 2004-2005 tax break collectively saved $64 billion in taxes, then cut 600,000 jobs through layoffs, the report said."
Kind of explains how tax breaks work out for corporate interests doesn't it? So how long are we going to be on the "cheer team" for more of them? Can I see hands?
How much per head was that they saved? 64 billion divided by 600 000 = 106 666.667 .. Wow, no wonder they could afford to pay bonuses. But I am thinking most of those laid off never made even close to 25,000 a year. And evem if they did if the corporation got a 64 billion dollar tax break why did they have to lay off any one? They could have paid their executives with that alone.
How many employee salaries and tax cuts does it take to offset executive compensation?
That's what we should all focus on. They saved 64 billion yet they still found it necessary to lay off 600,000 workers, why is that? Sound like BP and Gulf spill to anyone but me? How stupid do we have to become?
Oh, but it gets BETTER! Just when you think these reptiles that create a crisis by setting people up to lose their shirts, as well as their houses, and then use that very crisis to get socialism for the rich (government bailout - grand larceny) coulldn't possibly get worse, GUESS WHAT?
All those houses foreclosed in the last 4 years or so through Fannie and Freddie are going to be sold by our government at a huge discount. YOUR representatives and the main stream media are in cahoots to sell these properties, NOT TO THE PUBLIC, but to the very same type of people that screwed the public in the first place. Goldman Sachs hedge fund investors are the main beneficieries of this latest Geithner gangster crony giveaway. Yes, this was late august. Did you know about it? Me neither.
http://www.thestreet.com/story/11224917/1/a-huge-housing-bargain--but-not-for-you.html
SNIPPET 1: "These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.
You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs(GS_) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction. "
SNIPPET 2: "As intended, the mass media are playing their part in classic style. Every major newspaper in the U.S. has run articles discussing the plan as a rental conversion, allowing readers to assume that Fannie, Freddie and HUD will be renting the properties directly to families who need housing. And although there is an allowance for these kinds of rentals, it is a minor political facade to the obvious true goal of bulk-sale privatization of these homes."
SNIPPET 3 (The Vultures Salivate): "The investors in this program have been waiting for this opportunity since the portfolio of homes owned by HUD began to spike in 2007, when foreclosures surged first in the "Rust Belt," principally Ohio and Michigan. "
Now you know why the US Government is called a Kleptocracy by intelligent people like Michael Moore. I hope Occupy-Wall-Street gets a hold of this story and screams bloody murder. The American public needs to know about this. The media cover that is being run on this scam needs to be exposed. It's key to help the public understand this so they can start to wrap their heads around how the media uses this very same MO to get us into wars.
What a scam!
But of course Mr.Obama is totally clueless, even though his grandma was a bank officer, and most of his advisors are Goldman Sach's alumni.
Some comments that were made in regard to this scam:
Mike rivero
So the government has just made you all buy a bunch of foreclosed homes, then sells them at a discount to the money-junkies, who will turn around and sell them back to you at full price.Why doesn't the government sell these homes at that discount to families made homeless by the money-junkies' mortgage-backed security fraud?Because then the money-junkies can't make another fortune off of the same property twice in a row and won;t write those really fat checks to the 2012 campaigns!Welcome to the biggest whorehouse in Washington DC. You've just been screwed by the government again!
Wayne Lessmann in reply to MikeRivero
Because they could not make the kick back money they could by privatizing it. This is just another way for the well off to get more.
taxpayingrenter
Let me get this straight. I work hard, pay my taxes, which goes to bail out some criminal bank, which is in bed with some sleezy government members and foreign cronies, so that the sleezy cronies and criminals can get rich. What do I get? A foreign owned country of sleezy government business. And, wow, the chance to pay half my salary for rent in some critter infested slum house and the chance to see some slumbag sleezy goverment/businessperson drive around in a Mercedes. Bad goverment and bad business, and one buys the other.
alex360 in reply to taxpayingrenter
exactly right, and if they openly treat their own citizens this way you can only imagine what they do secretly or against other countries.....you can't trust the govt or their media one bit
Paintball Barrel in reply to taxpayingrenter
I think you need to pay more taxes! that solves everything...
Molly Mullen
here's the real question, how the hell do we STOP this??
GG in reply to Molly Mullen
History has shown that such things stop only when they feel a tangible threat to their lives.
Hobbes63 in reply to Molly Mullen
Two ways: votes, and guns. Voting doesn't seem to work, so maybe its about time we exercised our Constitutional right to keep and bear arms. Clearly, if this passes, everyone in Congress has got to go...immediately.
Slightly more seriously...send all your representatives e-mails, and encourage everyone you know to do the same. I just did.
GST GST in reply to Hobbes63
Guns won't work either. This isn't Somalia. There is no way to challenge the govt by force unless a large segment of the armed services rebel. It's a nice fantasy but it can't suceed that way. Now, civil disobedience does work, however millions have to be ready to sacrifice to pull it off. We don't seem to at that point yet though. No one wants to sacrifice yet, we're all still in the protecting our own mode right now.
agelbert,
The same $hit went on during the Great Depression. The wealthy became more wealthy when they bought property and companies for pennies on the dollar. If you don't belong to the super-wealthy club, the opportunity doesn't exist for you. As George Carlin said, "it's a big club and you and I are not in it"!
If you look back to the 1980's savings and loan crisis when millions of people went into foreclosure, you will discover that those homes also went to the super-wealthy for pennies on the dollar. Booms and busts are created for the for purpose of making the wealthy more wealthy. It's a planned game to get control of the entire globe and turn us all into serfs.
I have little sympathy for the workers. They voted for Obama and Congress, and they continue to vote for the same shills.
American are stupid, lazy, and greedy.
Capitalism has failed, it has destroyed itself by showing its true colours - greed, self indulgent arrogance.
At the start of this financial crisis back in 2007, one of the main villains of the pice - Fred Goodwin (head of Royal Bank of Scotland) was allowed to slither away with a massive reward for his criminal incompetence and greed, leaving thousands of ordinary staff unemployed.
We have been told by our Prime Minsiter David Cameron, that "we are all in this together", and the people accept that!!!
The only people immune from the effects of this depression are the people who caused it, and they are using our money, provided by our elected officials to carry on as if nothing had happened.
We have been stupid, like simple bovine creatures being led to slaughter, but hopefully that is changing.
The Dems should make a deal....... OK, bring those profits home at the old Bush rates, just as long as ALL tax rates are restored to where Bush found them.
Rats.
Ship.
Largesse.
You don't drown many of them if it sinks close to shore.
One thing in the article is wrong; not all that money went to corporate officers and investors. Some of it went to lawmakers who allowed this to happen.
And they're waiting with their hands out for more money this time. They'll convince themselves, or at least try to convince you the taxpayer/voter, that the money wasn't available anyway so getting 5.5% in taxes was better than nothing.
If the companies want a tax holiday, give them one; but make the tax rate about 25%, a little less than the international average for corporate taxes and less than the 35% charged by the US now, and make it contingent on a plan to use the money brought back through investment in manufacturing in the US.
We'll never get our economic house in order until we reform taxes, all of them, to include closing loopholes for both parties' favored few, setting corporate taxes at something like the international average, and regulating imports through taxes or tariffs so that foreign manufacturers don't have a cost-incentive to manufacture overseas and sell in the US.
Hmmm
Instead of begging the government should just pass a retroactive law stating that corporations that shelter profits overseas for the purpose of tax evasion are in violation of the law. As such any corporation that does not return all such profits to the US within 60 days face criminal prosecution. And further the 5 most senior executives as well as the entire board of directors will be immediately jailed if they fail to do so.
Come on people the government has passed "retroactive" laws dozens of times. There is NOTHING stopping Congress from doing the above at this time except their own personal greed and corruption.
How's this a surprise? Who hasn't noticed the pattern of destruction yet?