Corporations want a tax break to repatriate foreign profits—again!
Republicans, global corporations, the Chamber of Commerce, and Republican lawmakers are claiming that a tax rate of 5% for corporations to repatriate their foreign profits will create jobs, stimulate capital investment, and grow the economy.
We’ve heard that song before—the same pathetic rhetoric—in 2004. But the corporations did not use the billions they repatriated from the American Jobs Creation Act of 2004, to create jobs or grow the economy.
In fact, the biggest recipients—some of the biggest multi-national corporations in the world—laid-off thousands of employees after receiving this gift from the government.
Why on earth would we consider it again?
Despite evidence that corporations failed to create jobs after repatriating over $300 billion last time, Representative Eric Cantor, is advocating another corporate tax holiday.
Pfizer, the largest benefactor of the government’s benevolence, received $38 billion and laid off 10,000 employees over the next year. Other corporations that took advantage of repatriation had similar stories; returning billions of dollars under the tax break and then laying thousands of people off during the next year.
Fool me once…
Not this time. But it remains to be seen if a complicit Congress has learned anything from their previous mistake.
It’s true that only five percent tax on repatriated profit would be a great benefit to corporations. But nearly two-thirds of American corporations paid no tax in 2009—including corporations that made huge profits like General Electric ($26 billion), Exxon Mobil ($19 billion), Bank of America ($4.4 billion), and Chevron ($19 billion)—and many, despite not paying any taxes, got rebates from the IRS.
The need for jobs is paramount in this depressed economy. Until we alleviate the high unemployment, the housing market will continue to be depressed.
Corporate America is sitting on an estimated $1.6 trillion in capital yet they’re reluctant to help the dormant economy by putting people to work. Instead they’re hoarding all that cash.
So why would corporations use the nearly $1 trillion sitting in foreign accounts to create jobs this time. Patriotism? Future growth? Doubtful!
If CEO’s are unwilling to part with their hoarded trillions or lower their ostentatious salaries and bonuses to hire people and help the economy one wonders how repatriation will change their greedy persona’s.
While millions of Americans remain out-of-work and others toil for wages that have been stagnant for over a decade, executive pay increased by 23% in 2010.
With the nation’s economy still struggling and families having to give up even the simplest of comforts, with infrastructure deteriorating, and portions of the country reeling from unprecedented natural disasters, we must begin to question corporate integrity—question their patriotism!
If we’re going to allow the repatriation of foreign profits again we need to be less generous, more restrictive, and more diligent, holding greedy corporations accountable.
For the last two weeks I have given thought to this dilemma; to what would be fair and productive. We must adopt a policy that will help the nation and not just executives and investors.
It should start with a one-time repatriation of all of a corporation’s foreign profits.
Corporations choosing to take advantage of this one time benefit would be taxed at 28% upon bringing their profits back. They would have an opportunity to receive up to 18% in tax credits over the next 3 years by providing jobs here in the U.S. and making specific job creating capital investments.
Others, including former president, Bill Clinton, and new Chicago Mayor, Rahm Emanuel, are suggesting similar programs.
Whether Congress chooses to put part of the tax receipts in an infrastructure bank or assess a penalty on corporations cutting jobs, as they’ve suggested, a clearer more defined plan must be developed this time around to insure job creation and economic growth.
To put it in perspective, a trillion dollars could create 20 million $50,000 jobs for a year, or 10 million for two years, which would immediately stimulate demand—the ‘real’ problem of the slow recovery.
It’s easily argued that corporations cannot be trusted to do the right thing, and our failure to impose restrictions on them in 2004 was a huge mistake.
Alan Greenspan finally admitted it was fatalistic to think the private market could effectively regulate itself.
We’ve, hopefully learned from that miscalculation. Common sense dictates the need for tougher sanctions this time around.
Multi-national corporations have no sense of patriotism so it’s past time to think they will do the patriotic thing.
The giant banks and multi-national corporations nearly brought down the economy of the entire world.
Don’t let them do it again!
Tags: Bank of America, banks, Bill Clinton, capitalism, Chevron, Congress, Corporations, Democrats, Economy, Exxon Mobil, GE, Glass-Steagall, Jobs, middle-class, Pfizer, Politics, Rahm Emanuel, recovery, Repatriation, Republicans, Taxes, unemployment