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Job Destroyers Don't Deserve a Tax Holiday
When thinks tanks from the left and the right agree on something, Congress should pay attention.
A coalition of big businesses is waging a campaign for a massive tax holiday on corporate profits stashed overseas. Its lobbyists claim that this windfall would create millions of jobs. If our lawmakers buy that, they've got very short memories.
Just seven years ago, big American corporations made the exact same promises. And Congress gave them a tax holiday that allowed 843 companies to reduce their tax rate from 35 percent to 5.25 percent on $312 billion in offshore profits. 
What did Americans get in return? This week, our organization, the progressive Institute for Policy Studies, released a report showing that 58 companies that received 70 percent of the tax windfalls didn't boost employment. In fact, they actually destroyed a total of nearly 600,000 jobs.
Almost simultaneously, the conservative Heritage Foundation released a paper with the same conclusion: Tax holidays don't create jobs. When thinks tanks from the left and the right agree on something, Congress should pay attention.
But we're up against powerful forces.
A coalition called Working to Invest Now in America, which goes by the slick name WIN America, has deployed more than 160 lobbyists and spent at least $50 million to win a tax holiday on more than $1 trillion in offshore funds that might get repatriated if Uncle Sam grants this tax break. Lawmakers in both the House and the Senate have introduced bills that would do just that.
The Senate version, unveiled in early October, would give the deepest tax discounts to firms that create jobs, but that requirement only applies for one year. We need jobs that last, not positions that could vanish after the nation's supposed job creators get their huge tax windfall.
Some executives argue that without the tax holiday, these global firms would keep their cash offshore permanently, and it's better for Uncle Sam to get something rather than nothing. Nevertheless, offering such drastic tax discounts sets a dangerous precedent.
Back in 2004, the corporate lobbyists argued that the holiday would be a "one-time" deal. But after they won that round, they turned around and began amassing their offshore stashes once again. They must have counted on getting more tax holidays.
A tax holiday for job destroyers isn't only a waste of taxpayer money at a time of urgent needs. It hurts small businesses and other firms that operate only domestically. What sense does it make to give global companies deep discounts on their IRS obligations while these small, yet strong, engines of job creation face standard tax rates?
There are many things that we can do to strengthen the U.S. economy and spur job growth. But providing subsidies to companies whose business model is based on minimizing labor costs, sending profits offshore, and dodging taxes isn't a good strategy. These companies may compensate their CEOs lavishly and deliver value to shareholders, but they aren't in the business of creating jobs.
The WIN America campaign leader that stands to gain the most is Pfizer. The pharmaceutical giant was the leading beneficiary of the 2004 tax holiday when it toted $40 billion in foreign funds back to the United States.
And what did Americans get for Pfizer's subsidy? Instead of creating jobs, the firm proceeded to scrap more than 58,000 jobs in the years since that holiday.
Today, Pfizer is holding more than $48 billion in profits offshore. Will Congress be fooled again?
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15 Comments so far
Show All"Will Congress be fooled again?"
The idea that Congress was "fooled" last time is laughable. They were well aware of what they were doing and they were more than aware that there would be no jobs forthcoming.
Time to change our trade policy's. Time to tax profits no matter where they are earned if you are an American company. And if you don't care for that, be our guest, move to another country, but be aware that you will pay to bring your products to market here like everyone else and you will suffer a net loss by being a foreign company.
Time to put the American worker first, not Global corporations. There is a novel approach for our President and this Congress.
That was my first reaction too. Well, I also laughed at the idea that the congress was fooled in the first place. The author is writing about the government as if he still believes that the usa is a nation that gives a damn about what the people actually want.
Single-payer medical insurance for all Americans will level the playing field for small businesses that will then be able to create a lot of jobs.
Tax evasion schemes never end up creating jobs.
Here is MY tax proposal for these corporations. Bring that money back and invest it in this country at the regular 35% rate, since you are all the same as HUMANS, now, or any goods that you try to sell here after running off with our jobs and factories will be tariffed at a 99% rate. And whatever else you have left will be fined at a 100% rate. LIKE THAT? I see NO reason why you should get a freaking PENNY for fucking the country for money.
Got ANY offices, bank accounts, holdings at all within our borders? You either play FAIRLY or we SCREW YOU just like you have been doing to US for the last 30 years. My disgust with "American" business cannot be measured. There is NO reason why such treason should be rewarded.
There corporations actions have left us more vulnerable to world conditions than we have EVER been. We don't grow our own food, anymore, so one good war could make us starve. We don't make our own retail items, anymore, so one good trade war could destroy our ability to outfit ourselves for every day life. We don't even make our own military items here, anymore, the chips are made in China, who COULD be sneaking anything they want into our military devices and we would NEVER know it. We sent 47,000 FACTORIES overseas during W's 8 years ALONE. We have DESTROYED our ability to even take care of ourselves, and done so purely for the profit motives of a very few.
We are more at risk than we have ever been, and it's been done by these same people who now want this money to be FREE. It's NOT free. It's cost us the very security of our country, and they IGNORE that fact in their rush to steal even MORE from us. If the collapse that has been predicted in the next two weeks happens, this country will be worse off than ANY country in the world. We don't do a THING for ourselves, anymore. We have been led to this point by some very evil and greedy bastards. It's time to stop rewarding them and start making them UNDO the damage they have done to us all. And make them pay for it, too. They have all OUR money and they refuse to do anything with it. A 99% tax would solve that problem IMMEDIATELY.
Hmmmm...any wagers about whether or not the tax "holiday" will go forward? :) We all know darned well that these $trillions will be allowed to be "repatriated" at 5%. We also know that instead of creating jobs, there will in fact be more jobs offshored/outsourced/eliminated, per usual, and the executives be given even bigger bonuses from this $ than ever before. It's the same old same old in Amereicha.
The real criminals here aren't just the corporations - well they are, but at least they are staying true to their purpose, which is profit at the expense of all else - but the paid whores that we call Congresspeople, who allow this blatant graft to continue, year in and year out. Instead of Occupy Wall Street, we need an Occupy Congress, to keep them under the bright lights of national attention and make them justify why they continue to put their corporate masters before the Amereichan people.
After all, we can blame Wall Street all we want, but they wouldn't be able to get away with everything they do without the despicable, slimy whores in Congress passing legislation that allows them to.
"After all, we can blame Wall Street all we want, but they wouldn't be able to get away with everything they do without the despicable, slimy whores in Congress passing legislation that allows them to."
Stated truth.
"You can fool all the people some ot the time,
some of the people all of the time, but,
You can.t fool all the people all the time".
Abraham lincoln or Mark Twain.?
"You can fool all the people some of the time,
some of the people all of the time, but,
You can.t fool all the people all the time".
Abraham lincoln or Mark Twain.?
How do we Redesign Global Financial System? The most important lesson we can take away from global Capitalism, is the need to have the flexibility to be able to make major changes in the Financial System itself. A Global Democratic Socialist System would allow us to make those kinds of dramatic changes, because we are doing what’s best for all humans on earth. Global Climate change affects everyone to varying degrees. Some of us suffer from more frequent attacks from Allergies. We see more flooding in some area, and longer periods without Rain in other areas. Scientists have explained the reason for Climate Change; they say one of the main contributors to global climate change is the burning of fossil fuels. All humans on this planet will have to cooperate to solve Global Climate change. We have before us a unique opportunity to achieve world peace. Our connection to every other human on this has never been more obvious than it is today. In United State the argument for huge expenditures for Wars, become more difficult to defend. The need for reform at the UN and other international bodies has become more urgent. It is clearer now than at any time in recorded History the violence leads to more violence. War is not now, or ever has been the Answer.
"slimy whores" is too nice of a descriptor for congress. a "slimy whore" at least provides a service usually resulting in a satisfied client. Congress provides nothing of this sort. Even the "fat cat" friends of congress our never satisfied. A fair and equitable system for financing campaigns should be developed by a group outside of Washington and then voted on by the public.
a "slimy whore" at least provides a service usually resulting in a satisfied client.
Well said, Robert.
Politicians are like kippers: two-faced and gutless. And just as smelly.
"Job Destroyers Don't Deserve a Tax Holiday"
Who's going to make them pay? The legal graft taking politicians? Don't hold your breath
Direct democracy
Good article.
Big problem.
No real solution until the tax code is gutted and redone.
>>"A coalition called Working to Invest Now in America, which goes by the slick name WIN America, has deployed more than 160 lobbyists and spent at least $50 million to win a tax holiday on more than $1 trillion in offshore funds that might get repatriated if Uncle Sam grants this tax break."<<
Did anyone else get the same image - that of thieves negotiating to bring back the loot into the city from where it was stolen, on the condition that the loot will not be taxed and it will not be returned back to where it was stolen from? And the city is actually considering it because it's so desperate and helpless?
>>"There are many things that we can do to strengthen the U.S. economy and spur job growth."<<
Yes, and in the past (including recent past), that has included invading other countries. It just shows that if there is truly a will, people will be talking about tough actions and not tax holiday.
Thieves tend to become quite brazen when they know they can get away with it. Only a sustained, long fight by cops who make it clear they mean business will even make them to be not so brazen.
Do find the below in reference to this article and the thoughts it conveys.
We know where the money is. It’s time for Wall Street to start paying us back!
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Tell Congress there's a sensible tax on Wall Street that would help solve our budget problems.
When reckless trading on Wall Street crashed the global economy, American taxpayers bailed out the big banks to the tune of $4.7 trillion. That is trillion with a “T.”
Today, Wall Street is booming. Goldman Sachs, Morgan Chase, and Wells Fargo executives are earning as much as they did before the financial crisis. In 2010, the CEOs of these three banks made $52 million dollars combined.
Yet on Main Street, family incomes are tanking, job creation has stalled, and 42 million people are living in poverty -- more than at any time in the last 50 years.
We have done our part, now it’s time for Wall Street to do more – through a tiny sales tax on each Wall Street trade. It's called a financial transaction tax (FTT).
Right now Congress is considering huge cuts to Medicare and Social Security, as well as other important programs in health, education and housing.
Enough is enough! We know where the money is. It’s time for Wall Street to start Paying US Back! A tax on financial services can generate billions of dollars.
Please spread the word by forwarding this email to your friends and family.
Sincerely,
Aimee, Jeff, Sarah
and the RootsAction team
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Resources:
http://www.sourcewatch.org/index.php?title=Total_Wall_Street_Bailout_Cost