Job Destroyers Don’t Deserve a Tax Holiday

When thinks tanks from the left and the right agree on something, Congress should pay attention.

Sarah AndersonBy Sarah Anderson and Chuck Collins

A coalition of big businesses is waging a campaign for a massive tax holiday on corporate profits stashed overseas. Its lobbyists claim that this windfall would create millions of jobs. If our lawmakers buy that, they’ve got very short memories.

Just seven years ago, big American corporations made the exact same promises. And Congress gave them a tax holiday that allowed 843 companies to reduce their tax rate from 35 percent to 5.25 percent on $312 billion in offshore profits.

Dr. National and Mr. Transnational, OtherWords cartoon by Khalil Bendib

What did Americans get in return? This week, our organization, the progressive Institute for Policy Studies, released a report showing that 58 companies that received 70 percent of the tax windfalls didn’t boost employment. In fact, they actually destroyed a total of nearly 600,000 jobs.

Almost simultaneously, the conservative Heritage Foundation released a paper with the same conclusion: Tax holidays don’t create jobs. When thinks tanks from the left and the right agree on something, Congress should pay attention.

But we’re up against powerful forces.

A coalition called Working to Invest Now in America, which goes by the slick name WIN America, has deployed more than 160 lobbyists and spent at least $50 million to win a tax holiday on more than $1 trillion in offshore funds that might get repatriated if Uncle Sam grants this tax break. Lawmakers in both the House and the Senate have introduced bills that would do just that.

The Senate version, unveiled in early October, would give the deepest tax discounts to firms that create jobs, but that requirement only applies for one year. We need jobs that last, not positions that could vanish after the nation’s supposed job creators get their huge tax windfall.

Some executives argue that without the tax holiday, these global firms would keep their cash offshore permanently, and it’s better for Uncle Sam to get something rather than nothing. Nevertheless, offering such drastic tax discounts sets a dangerous precedent.

Back in 2004, the corporate lobbyists argued that the holiday would be a “one-time” deal. But after they won that round, they turned around and began amassing their offshore stashes once again. They must have counted on getting more tax holidays.

A tax holiday for job destroyers isn’t only a waste of taxpayer money at a time of urgent needs. It hurts small businesses and other firms that operate only domestically. What sense does it make to give global companies deep discounts on their IRS obligations while these small, yet strong, engines of job creation face standard tax rates?

There are many things that we can do to strengthen the U.S. economy and spur job growth. But providing subsidies to companies whose business model is based on minimizing labor costs, sending profits offshore, and dodging taxes isn’t a good strategy. These companies may compensate their CEOs lavishly and deliver value to shareholders, but they aren’t in the business of creating jobs.

The WIN America campaign leader that stands to gain the most is Pfizer. The pharmaceutical giant was the leading beneficiary of the 2004 tax holiday when it toted $40 billion in foreign funds back to the United States.

And what did Americans get for Pfizer’s subsidy? Instead of creating jobs, the firm proceeded to scrap more than 58,000 jobs in the years since that holiday.

Today, Pfizer is holding more than $48 billion in profits offshore. Will Congress be fooled again?

Sarah Anderson and Chuck Collins are among the co-authors of the new Institute for Policy Studies report, “America Loses: Corporations that Take ‘Tax Holidays’ Slash Jobs.”



Filed under Crime, Human Rights, NEWS, Opinion

6 responses to “Job Destroyers Don’t Deserve a Tax Holiday

  1. The more they have, the more they want. Its sad that Congress doesn’t cater to the people, only to the banks and corporations.

  2. I don’t know what the problem is. Have the military shoot all members in the board of directors in each company, take all assets from every shareholder; government shares would have to be cashed in first, especially in Pfizer. I can’t see any problem.
    All those who live by the JP.Morgan standard; shoot ’em.

    • That’s a bit radical. I don’t like violence, but the whole thing should be a criminal matter. U.S. citizens don’t get a tax break for using fewer Pfizer products, why should they get a break for employing fewer of us?

  3. Remember when the GM execs used their lear jets to fly to a government bail out meeting?

  4. I’m not in favor of violence either, though I do keep thinking about the arrogance and stupidity of the French nobles right before they got dragged out into the streets and killed at the guillotine. I really hope it doesn’t come to that. I don’t think it will.

    I notice one thing the tea partiers say about all this, the anti-union people, is that unions made them have to go overseas because we demanded too high wages here. MADE them? They had no other choice? We ALLOWED them to do it. Our government could put a tax on every overseas employee that was higher than what they’d pay a union worker here, and presto, magico, the jobs would still be here.

    Same with the tax holiday. Really? You want to keep your money in the Caymans and play games? OK. Any American with more than X amount of dollars in an overseas bank pays (fill in insane amount) of tax on every dollar of it every day. It’s quite simple to make them play ball, if the government is working for we, the people.

    Also, I take exception with the phrase “job creator.” A job isn’t a widget. They aren’t making something we need and only they can supply. They enter into and exit from relationships with people. I recommend those of us who are alert stop using that language, as it’s part of the creeping rot of their ideology. Like Obamacare. That’s now what everybody calls it, and it shouldn’t be.

    Just my $0.02!

  5. Pingback: Wealthy Corporations with a Trillion Dollars Stashed Offshore Lobby for a ‘Holiday’ from US Taxes | Shift Frequency

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