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No Tax Holiday for Corporate Job Destroyers
Uncle Sam Should Support Built-to-Last Companies, Not Built-to-Loot Enterprises
A powerful coalition of U.S.-based global companies is lobbying hard for a "tax holiday" on offshore profits.
Companies like Google, Apple, Pfizer, and General Electric have parked huge amounts of profits — a stash totaling more than $1.4 trillion —in offshore tax havens. They've stowed those funds abroad primarily to avoid having to pay federal taxes on that income.
But now they want to bring their treasure to the United States, albeit at a steep discount on what they owe the IRS. Instead of paying the statutory corporate income tax rate of 35 percent — or even the "effective rate," which for most global companies, is closer to 11 percent — they're urging Congress to let them do this at a tax rate that's a whisker over 5 percent.
They tell Congress they need a "tax holiday" to free up badly needed capital to invest in right here — creating jobs at a time when the U.S. economy is sputtering.
They've formed a lobby front called the WIN America coalition to make their case, spending over $50 million and hiring over 42 lobbyists that previously worked as staffers on select Congressional tax writing committees. Most GOP members would support any tax cut, even in their sleep, so WIN America has focused its lobbying firepower on Democratic members.
The coalition's corporate lobbyists argue this would be a win-win stimulus for the economy and a low-cost way to growth and jobs that both Republicans and Democrats could support.
The problem with these WIN America promises is this: Their pants are on fire. Here's how we know that: They waged the same campaign in 2004 with the same promises that they would create jobs, got their way, and created few jobs. Worse, some companies destroyed tens of thousands of jobs.
According to a new report that I co-authored, America Loses: Corporations That Tax Holidays Slash Jobs, most of the companies that claimed a tax holiday in 2004 dramatically reduced their national and global workforces.
In fact, 58 of the large corporations that took advantage of the 2004 tax holiday shed almost 600,000 workers in subsequent years. This downsizing was not a result of the economic meltdown as many of these companies prospered. Today, these 58 companies maintain combined cash reserves of more than $450 billion. There's nothing holding them back from investing in America.
These 58 giant corporations accounted for nearly 70 percent of the total repatriated funds and collectively saved an estimated $64 billion from what they otherwise would have owed in taxes. The 10 biggest "layoff leaders" were Citigroup, Hewlett-Packard, Bank of America, Pfizer, Merck, Verizon, Ford, Caterpillar, Dow Chemical, and DuPont.Unfortunately, a segment of corporate America embraces a "built to loot" business model.
The corporate flaks will complain that these job loss numbers are exaggerated. We believe they are low, but we won't know for sure until companies that benefit from U.S. tax breaks and subsidies are required to report, in plain language, the number of U.S. employees they have.
Congress shouldn't be fooled again. Limited incentives should go to activities that will create jobs, not another tax holiday for off shore tax dodgers. These companies are not in the business of creating jobs. They are in the business of shifting as much wealth to their top managers and shareholders as possible.
There are other businesses out there — small businesses and domestic companies rooted in local communities that should be the objects of our encouragement and support.
Management guru Jim Collins (no relation) has written about the characteristics of "built to last" companies, businesses that are not "take the money and run" oriented, but are dynamic, growing, and capable of adapting to changing market environments. Built-to-last companies don't play fast and loose with their stakeholders — namely, their employees, shareholders, the communities where they operate, and Mother Earth.
Unfortunately, a segment of corporate America embraces a "built to loot" business model. They shift every possible expense off their balance sheet and squeeze their stakeholders, with the exception of top management and shareholders. They outsource and offshore jobs and engage in accounting gymnastics to game their tax bills to nothing. They mooch from the common treasury, but don't contribute.
Lawmakers should block this fiscally irresponsible and entirely undeserved tax break.
Chuck Collins is a co-author of the new Institute for Policy Studies report, America Loses: Corporations that Take Tax Holidays Slash Jobs.
23 Comments so far
Show All"Uncle Sam Should Support Built-to-Last Companies, Not Built-to-Loot Enterprises"
Uncle Sam Should OWN Built-to-Last Companies, or they should be cooperatives.
Socialism is the answer.
Or, alternatively, how about a return to the "mixed economy" of the Truman-Eisenhower-Kennedy-Johnson-Nixon days?
That is a more reachable goal; and it worked to the benefit of all -- before the great consolidation of wealth and power at the top.
There are legitmate functions of government, and there are legitimate functions of the marketplace. The United States has, unfortunately, fallen prey to a class which seeks monopoly profits while singing the praises of the free market in order to keep the middle class marching to their tune.
Right you are, VR. We must aspire to reachable goals, then when one is reached, raise the hurdle to the next, until perfect socialism is attained.
"fallen prey to a class which seeks monopoly profits "
agree, they don't believe in "free markets" they believe in rigged markets
they are interested in an oligarchy
unfortunately for the fools in the top 2 percent, they will find that the top 0.001 percent will cast them out too
Agreed. There are some functions that government should own and some functions that would be better in the private sector. In other words, there are some enterprises where the mission should be providing the service, and some where it is acceptable for the mission to be profit .
Yeah, we see how well that worked in the various People's Republics. Tell it it to the EU.
Uncle Sam should limit his involvement to stopping any monopoly and encouraging competition. Graft, corruption, patronage, (the stuff that South Chicago lives on), are all illegal. Uncle Sam needs a real Attorney General and a lot of integrity.
"Congress shouldn't be fooled again."
Congress wasn't fooled.
They were bought.
Screw democracy.
Screw the constitution.
Screw nation states.
I can imagine a world without countries.
Why can't people be satisfied with the most precious possession?
Life
Last time I checked, no one has been prevented from defecting from the United States of America. Please feel free to leave at any time.
Tough luck. I'm attached to the land and am staying.
Paragraph #8 should be edited to read the title of Chuck Collins' report correctly as "America Loses: Corporations that Take Tax Holidays Slash Jobs. "
Sheesh.
Does anyone actually think Obama and the Dems will demand their paymasters pay what they owe?
Puleeze.
I don't know what the interest rates are overseas where these companies have stashed their profits, but I suspect it is higher than the prevailing rates in the U.S. Interest rates here are abysmal and I don't think the money we are talking about will return to our shores until the Fed raises rates. After all, profit is their only motive.
"Lawmakers should block this fiscally irresponsible and entirely undeserved tax break."
Fuck sold out politicians. The people can make the laws:
ni4d.us/
The People did. The Constitution of the United States of America has been largely ignored lately. It is time to realize what Madison and Jefferson realized: government is the problem. Those checks and balances weren't installed because they wanted to make governing more difficult. These men were fully aware of how easily power can corrupt ANYONE. The document is written to limit government for good reason. We don't need a new revolution, we need to restore the old one.
They move their phony HQ'ers overseas and now moan for a way to re-patriot their profits? NO! Follow the rules that stand and pay the taxes! We're sick and tired of this pandering to a bunch of multi-nationals that don't give a flying funk about this country except how they can use it to profit themselves. If they want their money so badly let them pay workers to carry it back to US in suitcases, $10,000 at a time. How many jobs would that create?
They give these guys a tax holiday and that should be the last straw! People in the streets to take back what the politicians are giving away: our country!
Is this a government, or a joke?
YES!! Hammer-home the use of "job destroyers". The GOP is on one of their propaganda campaigns trying to convince the American people that the same companies that continue to destroy millions of American jobs are the "job creators". Just seems the GOP forgets to mention the COUNTRIES in which these huge unpatriotic multinationals are creating jobs. Michigan already PROVED you can slash the government and taxes down to the bare minimum, AND offer corporations government sanctioned ZERO taxes, and the corporations will STILL send the jobs overseas because they can hire slave labor overseas. Michigan offered corporations EVERYTHING they wanted and the corporations actually told the governor "Yes, you've offered us everything. We have no complaints what-so-ever. You've been great. The problem is, we can't hire slave labor in the US so it just doesn't matter what you offer us."
just checkin'
The obvious conclusion of Tax Holidays is that our government doesn't represent us or give a $hit who has or doesn't have a job. It really doesn't take an Einstein to figure out that politicians have been "pimping-out" American voters/slaves for decades.
It will truly be a "miracle" when the majority of our dumb-downed populace can actually acknowledge this reality and demand change or vote the a$$holes out of office.
OK. This is what I believe is happening. I think the big corporations are just about sick and tired of foreign countries making the rules. I think these corporations are just too arrogant for words and they are regreting those expensive moves they made. Ya know, sorta getting homesick for the green, greengrass of home.
I believe they want to milk the last buck they can get out of the offshore loot they have stored in the pacific. Ya know, as in, we will come back only if it's tax free. I Never could understand, how our American auto workers were considered uneducated, as opposed to foreigners? I mean, didn't we all love those beautiful cars build by talented men and women of america? I know I lioved our fine cars and beautiful furniture. There is no one that can tell me that those backward folks on the other side of the pond are better than AMERICANS. After all, don't they all come over here to get an education courtesy of the American People?
It's time to shut the door on the runaway companies, let them leave and good riddence. I believe in american workers, and there are a bunch of ex auto workers that can build cars. Time to get back to work.....Q
Use the system we have, to fix the system we have... and demand one simple law: make it a misdemeanor NOT to vote in federal elections.
Another law? How original. This one will require another agency to pick up the sorry parasites and drag them to the poll to make an intelligent, informed choice. More stupid voters, just what we need.
'Unfortunately, a segment of corporate America embraces a "built to loot" business model.'
A segmment?
The segment that is corporate America.
That is America in this context.
This 'America' is a failure. There is no doubt about this any more. The longer it goes on the worse for the world, and please note, it is part of the world.
Unfortunately.
Individuals have to report world-wide income on their returns; corporations do not. That is why GE reported 12 Billion in profits but paid no income tax because that money was made by foreign subsidiaries. That income will not be taxed here until GE receives a dividend from its foreign subs. Then it will be allowed to off set US tax for any foreign tax it paid on those earnings with a foreign tax credit. The last time the Corporations got the 5 per cent tax break, their financial statements took a hit for the tax expense because it was not shown as an expense when earned. What really is astonishing is the fact that the corporations had to show an expense on the repatriated funds is that it means that the earnings were funneled thru tax havens and paid little or no foreign tax to begin with. That is their reward for sending US jobs overseas. GE now has more foreign workers than US workers according to GE's president. who just annnounced that GE medical research will be transferred to China.