The high drama is back in Washington as this Friday is the deadline for passage of a spending bill that will keep the doors open on the federal government. Getting that done is intricately married to passing legislation to extend the payroll tax cut for 160 million working Americans and also extending federal unemployment benefits.
Fortunately, one very bad idea apparently has been set aside as part of these discussions—allowing multinational corporations to repatriate (bring offshore profits back into the country) at a ridiculously low tax rate in the hopes that this will stimulate the economy. We tried this in 2004 and it didn’t work then.
The wheels have been coming off this phony “economic stimulus” proposal partially because some influential GOP members of Congress think it is a better idea to address corporate tax rates in general, not piecemeal.
But the other reason for the failure of the repatriation nonsense is that the truth is now coming out about these so-called offshore profits.
Back in July I participated in a press conference with Senator Carl Levin of Michigan in his Senate office. At that time we laid out the rational for why repatriation was not good for the people, small businesses and the economy.
Yesterday, Senator Levin released a new report exposing the repatriation fraud that the multinational corporations like Google, Apple, Cisco and Microsoft have been selling.
Some multinational corporations say they want to bring foreign funds back to America, but can do it only if they get a special tax break. They claim their foreign funds are otherwise ‘trapped’ abroad, but new data show that is not true. Many U.S. multinationals have already invested a large portion of their foreign funds right here in the United States, taking full advantage of the safety and security of the U.S. financial system to protect their money while paying no U.S. taxes on those funds to support the U.S. system.
Of the $1.4 trillion in offshore profits the multinational corporations have been dangling in front of us as the way to create jobs and boost the economy if we just slashed the tax rate to let them come home and be invested, about 46% of the money is already here….invested in our economy. But it’s not being taxed because it is still considered offshore profit.
So why are these multinational corporations willing to pay any tax at all on this money that they already have in the U.S.?
The profits can’t be used by the corporations to give windfalls to their stockholders and executives unless it is officially repatriated. They want to stimulate their own personal economies, not the country’s.