For Immediate Release
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President’s Expected Statement on Tax Giveaway to Multinationals Is Inaccurate
History Shows Tax Giveaways on Offshore Profits Neither Create Jobs nor Spur Investment.
WASHINGTON - The president is expected to claim in a speech Wednesday afternoon that a zero percent tax rate for multinational corporations that book profits offshore and a tax holiday for those multinationals that have already booked stockpiles of money offshore will increase the pay of the average American household by $4,000 — an erroneous notion according to the Financial Accountability and Corporate Transparency Coalition (FACT Coalition). The FACT Coalition is a non-partisan alliance of more than 100 state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices.
Clark Gascoigne, the deputy director of the FACT Coalition, issued the following statement:
“There is no evidence to suggest that a tax holiday for profits booked offshore will increase wages, create jobs, or spur additional investment. History has shown otherwise.
“To begin with, the majority of the money currently booked offshore is already invested in the U.S. economy — in U.S. stocks, bonds, real estate, and bank accounts — it’s just nominally booked to offshore subsidiaries for tax avoidance purposes. Repatriating the money from Manhattan or elsewhere in the U.S. will have no measurable impact on the U.S. economy, workers, or wages.
“Furthermore, when Congress last offered an offshore tax holiday in 2004, it was pitched as a job creation measure, but proved to be a failure. Because so few U.S. corporations keep substantial funds offshore, only .015 percent of U.S. companies took advantage of the 2004 giveaway with just 15 large companies accounting for half of the offshore cash repatriated, according to a Senate report.
“The companies that benefited most from the 2004 holiday actually reduced the number of their U.S. employees over the following two-year period, and there were no investments in production capacity or research and development. Instead, 92 percent of the cash that was repatriated paid for dividends, stock buybacks, or executive bonuses — funds that primarily benefited corporate executives, not average workers.
“These tax giveaways actually hurt middle-class taxpayers who will pay in either higher taxes, larger deficits, or cuts to services they use. That’s why more than 100 organizations last week came out against plans by the White House and congressional leadership to open the largest offshore tax loophole in U.S. history.”
Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites over 100 different civil society representatives from small business, anti-corruption, faith-based, government watchdog, human rights, investors, labor, public-interest, and international development organizations from across the ideological spectrum.
We seek an honest and fair international tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the financial system.