Bush Administration Tax Break For Overseas Corporations Was Costly Failure:

Discussion in 'Politics' started by Free Thinker, Oct 11, 2011.

  1. (Reuters) - Congress should not endorse another big tax break for overseas corporate profits because the last one in 2004-2005 was a costly failure, said U.S. congressional investigators in a report released on Monday.

    With an army of lobbyists pushing on Capitol Hill for a repeat of the Bush administration's 2004-2005 program, the head of the Senate Permanent Subcommittee on Investigations urged lawmakers to reject another corporate give-away.

    "We can't afford a tax break that would deepen the deficit, disadvantage domestic firms, and push more corporate dollars offshore, while failing to stimulate the economy," said Senator Carl Levin in a statement on his panel's report.

    Levin was joined by Senator Kent Conrad, a fellow Democrat, in writing to Congress' deficit-reduction "super committee," urging members to refuse lobbyists' pleas for a second overseas corporate income repatriation tax "holiday."

    Bipartisan legislation that would allow the tax break -- estimated to cost taxpayers nearly $80 billion over 10 years -- was introduced last week in the Senate, with a similar bill offered months ago in the House of Representatives.

    The repatriation tax holiday idea has some support, but analysts do not expect it to be approved on its own. Rather, it could be tacked onto a broader tax and spending bill.
    "I'm hoping the facts can break through the lobbying frenzy over yet another corporate tax give-away that makes no sense and would damage our economic recovery," Levin said.

    The subcommittee's report found that the last repatriation tax holiday cost the Treasury at least $3.3 billion in net revenue lost over ten years and that it "produced no appreciable increase in U.S. jobs or domestic investment, and led to U.S. corporations directing more funds offshore."

    A second such tax break, it said, would cut government revenues, fail to create jobs and increase incentives for U.S. corporations to move more jobs and investment abroad.

    The report can be found at hsgac.senate.gov following the links to "Subcommittees," "Investigations," and, at the bottom of the webpage, "Related Files."


    At issue is a stash of profits estimated to be worth up to $1.5 trillion that U.S. multinationals have parked overseas to avoid paying the 35 percent U.S. corporate income tax rate.

    The companies want to bring these earnings home to the United States, but they do not want to pay the full tax on them. So they are pressing for a tax break.

    In 2004-2005, they got one and 843 corporations brought home $362 billion in overseas income at a 5.25 percent tax.

    As they did six years ago, proponents of the tax break today are representing it as a boost to jobs and the economy, though doubts about this have been raised in numerous studies, in addition to the Permanent Subcommittee's report.

    Studies released last week by two think tanks said the 2004-2005 tax break did little or nothing to boost the economy or create jobs, despite promises that it would.