That CEOs of American-based, flagless corporations will say, or do, anything to make a buck--and line their own pockets--is not a surprising notion. That our political leadership keeps buying the nonsense spewed out by the Chamber of Commerce and the other megaphones of corporate greed is a tragedy--an obvious result of the corrupt campaign finance system. But, our elected leaders are not all paid-for sheep. Today, Carl Levin steps forward with some FACTS about the newest scam.
It's all about the corporate push to get a tax "holiday" to repatriate billions of profits stashed overseas. I've been writing about this for over a year (here is one of the earliest pieces), watching a corporate push aided by so-called "Democratic" think-tanks and a bi-partisan flood of love for what is a phony, sleazy, cynical push to rob the Treasury--again.
Thankfully, Carl Levin (whose investigation of Goldman Sachs' role in the sub-prime mortgage scandal found "a financial snake pit rife with greed, conflicts of interest, and wrongdoing") breaks through the nonsense with a detailed report out today. You see, the corporate p.r. machine has a problem--this scam was tried before using nonsensical and phony arguments. Levin's report shows how bogus the 2004 repatriation was:
The American Jobs Creation Act essentially provided guidelines on four uses of repatriated funds: two – using funds for jobs and research and development -- were encouraged, while two others – using funds for executive compensation and stock buybacks -- were prohibited.
Guess what?:
The report looked at the top 15 repatriating companies and found that, instead of spurring jobs and economic stimulus, the tax break was instead associated with increased corporate stock buybacks and executive pay. The report also observed that the 5.25% tax rate created a competitive disadvantage for domestic businesses that chose not to engage in offshore operations or investments, and provided a windfall for multinationals in a few industries without benefitting the U.S. economy as a whole.[emphasis added]
More specifically:
1. U.S. Jobs Lost Rather Than Gained. After repatriating over $150 billion under the 2004 American Jobs Creation Act (AJCA), the top 15 repatriating corporations reduced their overall U.S. workforce by 20,931 jobs, while
broad-based studies of all 840 repatriating corporations found no evidence that
repatriated funds increased overall U.S. employment.
2. Research and Development Expenditures Did Not Accelerate. After repatriating over $150 billion, the 15 top repatriating corporations showed slight
decreases in the pace of their U.S. research and development expenditures, while
broad-based studies of all 840 repatriating corporations found no evidence that
repatriation funds increased overall U.S. research and development outlays.
3. Stock Repurchases Increased After Repatriation. Despite a prohibition on using repatriated funds for stock repurchases, the top 15 repatriating corporations accelerated their spending on stock buybacks after repatriation, increasing them 16% from 2004 to 2005, and 38% from 2005 to 2006, while a broad-based study of all 840 repatriating corporations estimated that each extra dollar of repatriated cash was associated with an increase of between 60 and 92 cents in payouts to shareholders.
4. Executive Compensation Increased After Repatriation. Despite a prohibition on using repatriated funds for executive compensation, after repatriating over $150 billion, annual compensation for the top five executives at
the top 15 repatriating corporations jumped 27% from 2004 to 2005, and another
30%, from 2005 to 2006, with ten of the corporations issuing restricted stock
awards of $1 million or more to senior executives.
5. Only a Narrow Sector of Multinationals Benefited. Repatriation primarily benefited a narrow slice of the American economy, returning about $140 billion in repatriated dollars to multinational corporations in the pharmaceutical and
technology industries, while providing no benefit to domestic firms that chose not
to engage in offshore operations or investments.
6. Most Repatriated Funds Flowed from Tax Havens. Funds were repatriated primarily from low tax or tax haven jurisdictions; seven of the surveyed
corporations repatriated between 90% and 100% of their funds from tax havens.
7. Offshore Funds Increased After 2004 Repatriation. Since the 2004 AJCA repatriation, the corporations that repatriated substantial sums have built up their offshore funds at a greater rate than before the AJCA, evidence that repatriation
has encouraged the shifting of more corporate dollars and investments offshore.
8. More than $2 Trillion in Cash Assets Now Held by U.S. Corporations. In 2011, U.S. corporations have record domestic cash assets of around $2 trillion, indicating that that the availability of cash is not constraining hiring or domestic investment decisions and that allowing corporations to repatriate more cash would be an ineffective way to spur new jobs.
9. Repatriation is a Failed Tax Policy. The 2004 repatriation cost the U.S. Treasury an estimated net revenue loss of $3.3 billion over ten years, produced no appreciable increase in U.S. jobs or research investments, and led to U.S. corporations directing more funds offshore.
This is no surprise. Earlier this year, I ran into Rep. George Miller who told me that, after the 2004 scam, he asked CEOs in Silicon Valley what they did with the repatriated profits and they admitted to him that almost none of it went to job creation.
Let's summarize: corporate CEOs begged for this tax break back in 2004, they effectively broke the law by using the money repatriated for things expressly prohibited--including their own pay, what a shock.
This is not about job creation. "Repatriation" is no more a job creator than an economy with "fewer regulations". It's all nonsense.
It's about greed. It's about power--they are pushing for this because they can, because they have enough sheep in the Congress to go along with the scam.
Reminds me of the old saying: Fool me once, shame on you; fool me twice, shame on me.
7:19 AM PT: Friends" crazy day today so apologies if I need to run now and may not get to responses later.
7:20 AM PT: til later I meant...