Under the radar, lawmakers and corporate lobbyists have been talking about implementing yet another ruinous scheme to make rich corporations even richer while screwing their constituents.
How? By including a corporate tax repatriation holiday either in whatever debt ceiling deal is reached or in a vote later in the year. And (surprise!) it's going almost completely unreported by our mainstream media.
Here's a quick explanation from Rolling Stone's Matt Taibbi:
For those who don’t know about it, tax repatriation is one of the all-time long cons and also one of the most supremely evil achievements of the Washington lobbying community.
Read on to find out more.
Here’s how it works: the tax laws say that companies can avoid paying taxes as long as they keep their profits overseas. Whenever that money comes back to the U.S., the companies have to pay taxes on it.
Think of it as a gigantic global IRA. Companies that put their profits in the offshore IRA can leave them there indefinitely with no tax consequence. Then, when they cash out, they pay the tax.
Only there’s a catch. In 2004, the corporate lobby got together and major employers like Cisco and Apple and GE begged congress to give them a “one-time” tax holiday, arguing that they would use the savings to create jobs. Congress, shamefully, relented, and a tax holiday was declared. Now companies paid about 5 percent in taxes, instead of 35-40 percent.
Money streamed back into America. But the companies did not use the savings to create jobs. Instead, they mostly just turned it into executive bonuses and ate the extra cash. Some of those companies promising waves of new hires have already committed to massive layoffs.
It was bad enough when lobbyists managed to pull this trick off once, in 2004. But in one of the worst-kept secrets in Washington, companies immediately started to systematically “offshore” their profits right after the 2004 holiday with the expectation that somewhere down the road, and probably sooner rather than later, they would get another holiday.
According to the Bloomberg article,
The congressional Joint Committee on Taxation has said a repatriation holiday at 5.25 percent would cost $78.7 billion in foregone revenue over 10 years.
That's about $80 billion added to the deficit. At a time when lawmakers are talking about cutting billions and even trillions of dollars from programs and services that their constituents actually need, the idea of them offering yet another tax break to huge corporations is making blood shoot out of my eyes.
Please contact your representatives in Congress and the Senate and tell them NO TAX HOLIDAY for corporations. Enough is enough!