Repatriating Profits: Heading It Off at the Pass
(Picture courtesy of mikeleeorg at flickr.com.)
There is a case for letting corporations have another tax holiday, this one on profits they are keeping abroad rather than pay taxes on them. Rather than letting them off scot- free this time, as was done in 2005, the proposal is to levy a small tax and have the resulting funding directed into infrastructure.
There is so much need for some jobs program, that this version would be a boon to our unemployed, albeit a small one. The larger the program, the larger the gain from it. Sadly, the enlarged program would only attract more right wing energy to keep the economy from growing, because the present administration would get the credit.
Reuters joins in the chorus of naysaying, insisting that this proposed infrastructure project is yet another version of D.C. kabuki intended only to obscure its real purpose.
By tying overseas tax repatriation with an infrastructure bank (and job creation) members of Congress can get cover to reward multinational corporations, who are often their largest contributors. It would not be a naked repatriation but would be dressed as “job creation.” It sounds good, but at what rate would these corporate profits be taxed when they’re brought home? And how many jobs would be created?
Using these figures we can deduce that corporations would be taxed at a 2.5% rate vs. the normal rate of 35%. As for the number of job creation, it would go from approximately 34,000 this year before peaking in 2012 at 125,000 and then declining to 96,000 in 2013. So Congress would allow corporations to pay $25 billion in taxes on $1 trillion of profits while creating 250,000 jobs over three years.
Obviously, the writer is conveniently forgetting that at present there is no fund to tax at all. Any increase, wherever directed, would be an improvement.
The corporate welfare mantra is that U.S. taxes on business are horrible and a deterrent to locating in the U.S. at all. The actuality is that most corporations avoid taxes by a variety of activities – that include offshoring profits.
…there’s growing evidence that, despite the occasional crackdowns on especially creative tax accounting, routine corporate tax dodges are way up by historical standards, as multinationals play an increasingly profitable shell game…U.S. operations incur tax-deductible interest payments by borrowing money from cash-rich subsidiaries overseas. This is what’s known in industry parlance as “income-shifting.” It passes the time while one waits for the next U.S. tax holiday on repatriated overseas profits.
The true kabuki dance is the one performed by U.S. businesses that squeals at the burden of their taxes while avoiding paying those taxes altogether.
The assumption that the public is simply too stupid to notice, and the media too lazy to delve into the facts behind corporate lies, has been dismally accurate. We will harp on it here, at MyFDL and FDL, but not enough of the voting public will find its way here and learn.
We can grow and have more effect by continuing to put out the facts, and to tell them to whoever will listen. As the economic disaster hurts ever more deeply and more widely, facts are daily more important to those hurting voters who we attract.