Let me just be 100% absolutely clear…and this will prove to be anti-climactic…corporations and wealthy interests are actively lobbying on behalf of their own selfish interests which will have no benefit to you.
Shocking – I know.
Now – we’ve already written about how The Corporate Tax Code Is a Big Clusterf#ck and U.S. Corporation Tax Rates at 10 Year Low. But corporations aren’t letting up any time soon….Bloomberg reports that large multinational corporations are continuing to find loopholes in the tax code to stash money overseas with a belief that they will be able to successfully lobby government to tax those profits at a lower rate:
“Google’s practices are very similar to those at countless other global companies operating across a wide range of industries, such as technology, pharmaceuticals and retail,” Google said in an e-mailed statement.
The temporary repatriation proposal hasn’t advanced in Congress. Obama opposes a one-time tax holiday, arguing that it would be a giveaway to big corporations.
America has tried the “corporate tax holiday” before – in 2004; people were told that if companies could just bring these foreign assets (which they’ve been hiding overseas) back to the mainland…the country would see a windfall in tax revenues. Only – as the chart below shows – all that did was incentivize companies to increase the amount of corporate profits they hid overseas. It went from an average of $342 million a year on average to an average of $1.3 BILLION a year – immediately thereafter. It’s not a complicated concept….this is the story of Pavlov’s dog told as corporate profits.
It’s not complicated. Companies will charge more if that’s what the market is willing to pay and they’ll layoff workers if they think it will have a net positive impact to the bottom line. It doesn’t matter if profits are excellent or not; it just doesn’t. We’ve been down this road before and while many would like to rewrite history…the facts remain. The Center for Budget and Policy Priorities released an analysis on a “corporate tax holiday” in which it found corporations that benefited from the “tax holiday” in 2004 also laid off thousands of workers passing profits on to shareholders:
In the months following enactment of the tax holiday, press accounts indicated that many firms laid off workers even as they reaped large benefits from the tax holiday and passed them on to shareholders. The New York Times reported in 2004 that one of the most prominent proponents of the original holiday, Hewlett-Packard, “has announced a repatriation of $14.5 billion, layoffs of 14,500 workers, and stock buybacks of more than $4 billion for the first half of 2005 – about three times the size of its buybacks in the period a year earlier.”  Other companies that took advantage of the holiday but laid off American workers shortly thereafter included:
- Pfizer, which repatriated around $37 billion (the largest amount of any firm) shortly before eliminating around 10,000 American jobs and closing U.S. factories in 2005;
- Ford Motor Company, which repatriated around $850 million under the holiday and then laid off more than 30,000 U.S. workers in 2005 and 2006; 
- Merck, which repatriated $15.9 billion and announced layoffs of 7,000 workers in 2005;
- Honeywell International, which repatriated $2.7 billion and laid off 2,000 workers in 2005 and 2006.
The Center for Budget and Policy Priorities also found another corporate tax holiday:
…would cost the Treasury considerably more in later years, for a ten-year net revenue loss of $79 billion — 24 times the net projected cost of the 2004 tax holiday.
It’s very concerning because you have MAJOR lobbying from the nation’s largest corporations via business groups (unions for corporations) WinAmerica and Business Roundtable. These groups are made up of companies with histories of both sponsoring Democrats and Republicans alike, and they’re all joining together to push for these corporate handouts that will only funnel up to the shareholders of their companies. As we’ve said - 57% of all capital gains go to the 1% and that’s exactly what this is.
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