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With the deadline looming for the Joint Select Committee on Deficit Reduction, or “supercommittee,” major corporations have argued for the second tax holiday in a decade through the repatriation of offshore funds at a steeply discounted tax rate. But recent history has shown us that tax holidays fail to create jobs and fail to improve economic conditions for 99 percent of Americans. According to the Congressional Budget Office, the repatriation tax holiday ranks dead last among job creation policies and would at best create one full-time job for every one million in federal costs.1 If tax holidays have only succeeded in enriching corporate executives and encouraging more tax dodging, thus exacerbating budget deficits, why should Congress be fooled twice?
What is chronicled on these pages is clear as day: Twenty major American corporations that have stashed half a trillion dollars of profits overseas have spent more than $1 billion on federal lobbying and campaign contributions and hope to get a new, enormous tax break that could cost the government $79 billion over the next decade.2 Companies say they will use the cash to create jobs in America, but the 20 companies featured in this report are already sitting on $348 billion in cash while in many cases shipping jobs overseas. When Congress gave corporate America the very same tax break seven years ago, 92 percent of the repatriated money went to CEOs and shareholders, not job creation.3 Given the benefits to those at the top, it is no wonder these corporations have spent the last seven years stockpiling profits in offshore tax havens at an even greater rate in anticipation of another tax holiday. Meanwhile, they have spent lavishly on politics in preparation for another time to cash in.
- Multiple studies have found that after the tax holiday provision passed in 2004, there was no significant investment in jobs at home. For every dollar repatriated, 92 cents flowed into the pockets of CEOs and shareholders through compensation packages and stock repurchases. Instead of investing in jobs in the United States, these 20 companies have directed nearly $578 million into compensation packages for their CEOs and $500 billion into offshore tax havens.
- If American companies received another tax holiday through repatriation, the effect would be to reduce tax revenue by $79 billion over ten years. Those are funds we could invest in crucial jobs. We could take half that amount to employ 284,213 public safety workers and 290,684 teachers, which would merely fill the hole left by the 290,000 teachers laid off since September 2008.4 We could use the other half to begin to address the massive shortage of nurses and home health aides and begin to rebuild our crumbling infrastructure; we could employ 1 million health workers and 221,779 highway maintenance workers.5 That’s nearly 2 million jobs.
- The 20 companies analyzed have spent $1 billion on federal lobbying and campaign contributions since 2005. The bulk of this spending ($901 million) has gone toward lobbying—that’s $365,638 each day including weekends.6 But since lobbying for a tax holiday has shown to bring a 22,000 percent return7 on investment, this could be money well spent. Top spenders on lobbying include General Electric ($164 million) and Verizon ($104 million).
- Through their PACs and executives, these companies have made $110 million in federal campaign contributions since 2005. Top contributors at the corporate level include General Electric and Honeywell (giving $13 million each). At the individual level, top donors tended to be senior executives and CEOs, including Microsoft CEO Steven Ballmer ($157,300) and Merck CEO Richard Clark ($100,800).
- These 20 companies have directed $6.4 million in campaign contributions to members of the supercommittee since 1989. Top recipients include Senator Max Baucus, Representative Jim Clyburn and Representative Dave Camp. At least 35 former staff members to these supercommittee members have lobbied for the companies featured in this report, and some have lobbied for the WIN America Campaign, a coalition of corporations and trade associations pushing for another repatriation tax holiday.
1. Chuck Marr, “CBO Ranks “Repatriation Holiday” Dead Last in Job Creation,” Center on Budget and Policy Priorities, November 16, 2011. http://www.offthechartsblog.org/cbo-ranks-repatriation-holiday-dead-last-in-job-creation.
2. According to the Joint Committee on Taxation. Chuck Marr, Brian Highsmith, and Chye-Ching Huang, “Repatriation Tax Holiday Would Increase Deficits and Push Investment Overseas,” Center on Budget and Policy Priorities, October 12, 2011. http://www.cbpp.org/cms/index.cfm?fa=view&id=3593.
4. Tami Luhby, “Can Obama save teacher jobs?” CNN Money, September 8, 2011.http://money.cnn.com/2011/09/08/news/economy/Obama_teacher_jobs/index.htm.
5. Job estimates are based on Median Annual Earnings for each occupation (plus 30% for benefits) as provided by the Bureau of Labor Statistics’ National Compensation Survey published in May 2011 for earnings in 2010.
7. Dan Eggen, “Investments Can Yield More on K Street, Study Indicates,” Washington Post, April 12, 2009.http://www.washingtonpost.com/wp-dyn/content/article/2009/04/11/AR2009041102035.html.