There was an interesting article in the internet edition of Business Week today, which I felt deserved some comment. It builds on bonddad's excellent
diary refuting republican economic talking points.
The
article analyzes the impact of the American Jobs Creation Act of 2004, which reduced corporate taxes on profits repatriated from overseas operations. The aim, as indicated in the Act's title, was to spur job growth in the US, by reducing the corporate tax rate on overseas profits from 35% to just 5.25% for this year. Companies would be limited in what they could spend the repatriated profits on, with the aim of spurring growth, particularly jobs.
The article looks at what companies have done and finds:
One thing is clear, however: The money piling in from abroad as the result of the Jobs Creation Act has done little to actually spur hiring. In fact, six of the 10 companies repatriating the biggest totals are axing workers in the U.S. They include HP, which announced July 19 that it would cut its head count by 14,500 in the U.S. and abroad, and Pfizer, which has said it will shutter 20 factories with undisclosed U.S. job losses to lower costs by $4 billion by 2008.
Many of the companies have returned the profits to shareholders either as increased dividends or share buy-backs (not technically allowed under the terms of the Act). Further, Pfizer
bought Vicuron Pharmaceuticals Inc, which is likely to lead to more job cuts during the merger.
So, the question remains, where are the jobs?