A reaction to the report in this morning's "Heritage(!): "Repatriation Tax Holiday Wouldn’t Create Jobs" (GOOG; GE; CSCO)".
From A Taxing Matter:
In a recent posting, I commented further on the lack of arguments supporting the corporatist lobbying drive for another "repatriation tax holiday" for multinational corporations that have stashed more than a trillion abroad (often through gimmicky transfers of intangible property such as rights to patents developed in the United States). See Repatriation Holiday Lobbying--Money Speaks (Oct. 3, 2011).Thanks to a sharp eyed reader for the pointer.
The reasons are manifold. Corporations today are not cash-strapped--they've got lots of cash in the US too. And even if they need cash that is currently offshore, they can borrow against that cash at exceptionally low rates today. So they aren't investing in expansion that would create new jobs for lack of cash--they are not investing in expansion for lack of customers. The middle class is collapsing, after four decades of reaganomics have steadily worked to erode unions and the empowerment they offer workers, leaving worker wages in decline while their bosses roll into the ranks of the superrich on their newfound ability to take an undue share of the companies' productivity gains. Even when money is actually brought back (rather than already resting in US bank accounts), it is most likely to be used to pay even higher performance bonuses to top managers and to pay for dividends and share buybacks for shareholders. And those shareholders are most likely merely to use it to make new secondary market share purchases--resulting merely in a net change in their portfolios--not direct funding of new enterprises. Much of those secondary market investments are likely to be in emerging markets rather than in the United States.
Most telling is that the very fact of one tax holiday means that corporations will inevitably plan for and conduct business assuming future tax holidays. It is ikely that planning for this current lobbying effort began on the day Congress passed the 2004 Jobs Act!...MORE