NEW REPORT: Fool Me Twice? Corporations Pay Congress to Rip Off Taxpayers Again

clee November 18, 2011 2

November 2011
(Download full report)

Executive Summary

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.

KEY FINDINGS

  • 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.

Download the full report.


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.

3. Scott Klinger, Sarah Anderson, Chuck Collins, John Cavanagh, Sam Pizzigati, “America Loses: Corporations that Take “Tax Holidays” Slash Jobs,” Institute for Policy Studies, October 3, 2011.

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.

6. The $901 million total in lobbying expenditures spans 2005 through the first nine months of 2011.

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.

2 Comments »

  1. Gatlinjon November 29, 2011 at 3:24 am - Reply

    The greatest redistribution of monies has taken place in the last 30 years as the middle income earners have been nearly taxed out of existence and the top two percent have had their taxes written away. We then had monies redistributed as factories and manufacturing companies were outsourced and middle income earners began a fast decrease in numbers who still had jobs. The proof of all this is some simple revelation. ExxonMobil had its best year of earnings; yet paid NO TAXES. Bank of American had maybe its best year of earnings and paid no taxes. The wealthy Top 2% pay nowhere near the percentage of taxes that the middle income earners pay. They have low percentage and too much of their earnings are tax free–this is not fair taxation. Republicans only pass laws and taxation that will benefit the top two percent. They do not seem to understand that if we are to have a robust economy; then we need a prosperous middle income population. We do not have it because the laws have moved the money to the few at the top and the Republicans lie that they create jobs. If any one of them created a job, the Republicans would probably tell what jobs, how many, what do they pay? No they will not! That group at the top will not and do not create jobs. We can only hope and work to get more Democrats in the House and more Democrats in the Senate. Too many middle income people have been brainwashed by Fox News and we need to try to inform them how their monies and their jobs have been taken away by many of the Top Wealthy people like the Kock brothers who also use their monies to buy favorable legislation and influence even the highest court members as Supreme Court Judge Thomas and Supreme Court Justice name kinda like Sevalla (can’t remember his name he is so prejudiced in his views). We need fighters for the middle income people to keep a prosperous middle income group in our country. The Rich 2% should have to go back to paying what they did when Eisenhower was President. The Monies that have been distributed to the top through all of this unfair taxation needs to be redistributed back down to the MIDDLE INCOME PERSONS and the WORKING POOR, and you would see a healthy economy in a short time and our debts would be paid and we could have a surplus. We need to bring our service persons home and we need to have done a pretty fast redistribution of the monies so that we can have middle income prosperous jobs again. Regulations should be established that foster some control over irresponsible bonuses to top titled people and some control over unearned parachutes given to top people, parachutes that have unreasonable money amounts.

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