Repatriation. It's a word many schoolchildren probably haven't yet learned to define or even seen very often outside of spelling bees. But when it comes to corporate taxes, repatriation is the cornerstone of an idea that has the potential to severely hurt millions of children and parents and widen the already historic and unconscionable gap between the rich and the poor.
In its simplest definition, repatriation is bringing something back to its country of origin—returning it back home. One of the solutions to the jobs crisis being proposed by some of our Congressional leaders and lobbied for aggressively by some of the country's richest corporations is a rehash of an old experiment: enacting a repatriation tax holiday that would temporarily allow U.S.-based multinational companies to bring home profits they currently hold overseas at a 5.25 percent tax rate, instead of the usual 35 percent corporate tax rate. Under current tax law, multinational companies generally pay no U.S. corporate taxes on foreign income until those profits are brought back to the U.S. As the Center on Budget and Policy Priorities (CBPP) explains, “This effectively allows such firms to defer payment of the U.S. corporate income tax on their overseas profits indefinitely, even though they may obtain an immediate tax deduction for many expenses incurred in supporting the same overseas investments. This can produce a negative U.S. corporate income tax—that is, a net government subsidy—for overseas operations. In addition to causing the federal government to lose tax revenue, this structure gives multinationals a significant incentive to shift economic activity—as well as their reported profits—overseas.”
The argument for the repatriation holiday is that giving corporations a huge incentive to bring profits back right now—in the form of an enormous tax break—would bring billions of dollars back to the U.S. economy that would be reinvested and provide a big stimulus to our economy. Corporate proponents and their Congressional allies argue this will create desperately needed jobs.
But the last time this was tried, under a 2004 Bush Administration plan, it didn't work out that way. Instead, as CBPP points out, “The evidence shows that firms mostly used the repatriated earnings not to invest in U.S. jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders. Moreover, many firms actually laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders.” Many economists and scholars believe that if corporations get their way and get another repatriation holiday, history will repeat itself—and once again the corporations and their shareholders, not American workers, families, and children, will be the only winners.
The nonpartisan congressional Joint Committee on Taxation has estimated the holiday would cost the federal government about $80 billion over ten years in lost revenue. The Economic Policy Institute's Andrew Fieldhouse puts it this way: “While there are numerous job creation proposals that would meaningfully lower unemployment, some lawmakers are pushing counterproductive policies disguised as job creation packages. The proposed repeat of the corporate tax repatriation holiday is one such wolf in sheep's clothing.” When the nation is already facing a jobs crisis and many Congressional leaders are threatening to slash nutrition, child care, and other safety net programs children and families rely on as a means of balancing the budget, revisiting a failed idea instead of coming up with real solutions and real jobs is a threat children and families and our country cannot afford. As the Occupy Wall Street protestors are shouting, let's “just say no to corporate greed” and to Congresspeople who continue to raid from the poor and children to curry favor and campaign contributions from the rich.
Follow Marian Wright Edelman on Twitter: www.twitter.com/ChildDefender
It would seem that if we correct the business climate AND we bring alot of money back in, at least some of that will end up in other places than dividends - just plain logically. As an economics trained former financial advisor (non-trading), I think this would be of benefit.
Furthermore, I think that anything we can do the will bring about more growth will enable us to have more funds from which to fund the, what I call, "required" social safety nets, under which I include a strong education that includes values and emotional intelligence.
Nice article.
The Rational NonPolitician
(thenonpolitician.homestead.com)
According to Thomas Friedman's article posted on NYT:
"The news was that Citigroup had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.
Our Congress today is a forum for legalized bribery. One consumer group using information from Opensecrets.org calculates that the financial services industry, including real estate, spent $2.3 billion on federal campaign contributions from 1990 to 2010, which was more than the health care, energy, defense, agriculture and transportation industries combined. Why are there 61 members on the House Committee on Financial Services? So many congressmen want to be in a position to sell votes to Wall Street.
Capitalism &free markets are the best engines for generating growth and relieving poverty — provided they are balanced with meaningful transparency, regulation and oversight. We lost that balance in the last decade. If we don’t get it back — and there is now a tidal wave of money resisting that — we will have another crisis. And, if that happens, the cry for justice could turn ugly. Free advice to the financial services industry: Stick to being bulls. Stop being pigs."
themselves to make a Profit !
It's not enough to raise your own Children, you must raise all other Children also ?
There are many "Nice" Places to work and invest and produce products besides the USA where
local Government understands that it is not the responsibility of Business to raise children !
Jobs require Capital to be invested to sustain them, Taxes on Capital simply destroy Jobs !
So move them somewhere else before the DEMS destroy more Jobs !
And let's suppose we do increase corporate taxes...that doesn't end H-1b wage suppression nor does it compensate those hurt by H-1b.
Yeah, that'll be a tough decision.
Any time I see the phrase 'cost the government' I immediately know the author doesn't understand how the economy should be working.
6. Establishing a moratorium on all new regulations on Big Oil. “During the reconstruction of the EPA, we must institute a moratorium onnew regulation, to establish a predictable business environment and encourage energy development.”
7. Eliminate tax incentives for renewable energy and create additional subsidies for Big Oil. “American taxpayers should not be forced [to]… shoulder the cost of funding billions of dollars in subsidies and loan guarantees for inefficient and uncompetitive green energy programs.”
8. Kneecap groups for filing suit over environmental violations by Big Oil.“During the reconstruction of the EPA, we must institute a moratorium on new regulation, to establish a predictable business environment and encourage energy development.”
9. Fast-tracking drilling permits for Big Oil in the Gulf Coast. “The first step towards energy security and job growth is returning immediately to 2007 levels of permitting in the Gulf of Mexico, responsibly making more of the Gulf available for energy production.”
10. Immediate approval of the top item on Big Oil’s wish-list, the Keystone XL Pipeline.
1. End all efforts at federal regulaltion of fracking by Big Oil.
2. End all regulation of Big Oil’s CO2 emissions. “Greenhouse gases are naturally occurring gases and carbon dioxide (CO2) (the focus of environmental activists) is exhaled by animals, required tosupport plant life, and represents lessthan 0.1% of the world’s atmosphere. … Repeal EPA’s authority over green-house gases (GHG), and eliminate allcurrent and planned EPA programs torestrict carbon dioxide emissions (in-cluding taxes or cap and tradeschemes).”
3. Allow Big Oil to drill on sensitive lands owned by taxpayers. “We also strongly recommend opening other federal lands with known resources for development, particularly in Alaska, the Atlantic OCS, and our western states. Alaska’s Arctic National Wildlife Refuge (ANWR) Coastal Plain (1002) alone contains as much as 12 billion barrels of oil and 10 trillion cubic feet of natural gas.”
4. End federal efforts to require development of renewable energy, which competes with Big Oil. “We oppose the adoption of national Renewable Portfolio Standards (RPS), 5. Cripple the EPA by slashing budget by 60 percent. “We believe we must dramatically reduce the size, budget, and influence of EPA. … Our reconstructed,limited EPA would be dramatically re-duced in size and influence, returning more power of regulation and up to 60%of the current federal budget to state governments.”
That's a pretty lame excuse for being against it . . .
The reality is that the US Government can probably get 15% of billions/trillions . . . or they can get nothing by keeping the same policy in place.
...is a government that can do it to any of the rest of us...
...right?
I would think "multinational" would mean that a corporation would also pay taxes to another country, also.
If a company wants to pay one tax, based on a country's tax rate, it should become a national of that country.
That's a pretty easy work around, you then just file some paperwork and call GE Germany a totally different company than GE USA.
If, let's say, GE USA wanted to avoid paying US tax rates, and they file as GE Germany, then they should lose their standing as an American company, and be subject to German laws and taxes.
I don't know how many American based companies would want to open companies in foreign countries if they were subject to those countries laws and regulations, and got no protection from America in case there was a revolution or something.
As incompetent U.S. politicians (i.e., Paulson, Bush, Cheney, Levin, Shelby, Dodd, Bernake, Geithner, Clinton, Ruben, Greenspan) did nothing to prevent it, their Wall St. cronies & lobbyists laughed their way to the bank by betting against the same structured products in which they sold throughout the world.
Perhaps, the central question is how could politicians and bankers rape and pillage the financial system of a country for so long through deception and fraud without being accountable? (i.e., think 401k, real estate, giving millions of tax payer $ to countries(Israel, Egypt, Pakistan, Jordan, Kenya, Mexico, South Africa, Nigeria), bailing out N.Y.C. in the 70's, Paulson using tax payer $ for what in essence was a coup d'etat of the U.S. Treasury, etc...)
Wow, isn't capitalism great in the U.S.?
As a Chinese economist recently stated, where ever there is wealth in the world, Wall St. will find a way to steal it while politicians do nothing to prevent it...
The stench of the financial crisis created by Wall St. and allowed by U.S. politicians permeates from Shangai to Dubai...!
Wall Street didn't "steal" anything; all Wall Street is guilty of is buying and selling a pig-in-a-poke that came with a rock-solid government guarrantee - backed up with "other people's money". When the pig-in-the-poke turned out to be nothing more than a deadbeat cat, there just wasn't enough "other people's money" to cover all the losses.
Capitalism didn't cause this mess. Capitalism had nothing to do with it. Socialism, disguised as government running an "affordable housing program", caused this mess.