By Bob Keener | Business for Shared Prosperity
Washington, October 11, 2011 – As big American companies step up calls for another tax holiday on money they’ve parked offshore, Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, has today released a study showing that a similar 2004 “one-time” tax holiday did not increase jobs or spur domestic investment as promised. Instead, it was followed by layoffs and increased CEO pay, stock buybacks and stockpiling even more money offshore. “This new study affirms what small business owners have been saying since the clamor for another tax holiday began: tax giveaways to multinational corporations don’t create American jobs. The last thing we need is to tilt the playing field even more against the real job creators on Main Street,” said Scott Klinger, tax policy director of Business for Shared Prosperity, a national network of forward-thinking business owners and executives.
Frank Knapp, President and CEO of the South Carolina Chamber of Commerce, said, “If the U.S. multinationals lobbying for another big tax giveaway wanted to create jobs, they’d be doing it right now. They’re sitting on big profits and cash hoards. Don’t fall for the smoke and mirrors. We shouldn’t be rewarding – again – the companies who keep offshoring profits and jobs. It’s a slap in the face to the 5,000 members of the South Carolina Small Business Chamber of Commerce and Main Street businesses all across this country who are the backbone of jobs and investment in America.” Mr. Knapp is also Vice Chairman of the American Sustainable Business Council, a partnership of 40 business organizations including Business for Shared Prosperity.
The study released by Sen. Levin found that the top 15 firms that benefitted from the 2004 tax holiday on repatriated earnings were net job destroyers in the three years following. It also shines a light on the practice of “round-tripping” – bringing money home to take advantage of the tax holiday, only to immediately ship some of those funds offshore in an effort to avoid still more taxes. In 2005, U.S. corporations brought back $259 billion to the United States and immediately turned around and sent $104 billion offshore, much of it to tax haven nations. Since 2004, the amount of earnings by U.S. corporations held offshore has more than tripled.
“Rather than granting a big tax break to those corporations that have betrayed America’s trust, it is time to close the barn door to keep profits earned in America from being offshored to tax havens where their operations are often nothing more than a post office box and a brass nameplate on a wall,” said Paul Egerman, founder and former CEO of eScription. “Congress should pass the Stop Tax Havens Abuse Act, not reward tax avoiders with another tax holiday.”
Mr. Egerman is one of the more than 1,200 business organizations, business owners and investors who have signed the Business and Investors Against Tax Haven Abuse petition at www.businessagainsttaxhavens.org calling on Congress to pass the Stop Tax Havens Abuse Act.
The Joint Committee on Taxes has estimated that a new corporate tax holiday would cost the U.S. Treasury between $41 billion and $78 billion, depending on the tax break rate.
“We can’t afford the waste of another massive corporate tax break that rewards those who have made an artform of avoiding their tax responsibility through tax havens and other accounting manipulation,” said Dean Cycon, CEO of Dean’s Beans, a Massachusetts-based coffee company and member of Business for Shared Prosperity.“At a time when our government is laying off first responders and teachers and the infrastructure upon which business depends is crumbling, we don’t have the money to repeat a failed policy.”
Corporate backers of a new tax holiday, led by the WIN America coalition, have invested more than $50 million and hired 160 lobbyists to win this giant tax break for big business. “WIN America’s rhetoric makes it sound like they are spending $50 million and hiring an army of lobbyists because these big prosperous corporations want to create jobs,” said Jody Gorran, chairman of Aquatherm Industries Inc, in Lakewood, NJ, and Business for Shared Prosperity member. “If that’s the case, they can use the record $2 trillion in cash that they are sitting on and begin hiring tomorrow. And if they don’t know how to do it, I’d be happy to talk to them. My company has been manufacturing in New Jersey for 22 years. It’s time for big corporations to stop passing the buck, pay their fair share in taxes and create jobs here at home.”
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Editor’s Note: To interview these and other business leaders and learn more about past and current tax holiday initiatives as well as business support for the Stop Tax Haven Abuse Act, contact Bob Keener, 617-610-6766, bobkeener@businessforsharedprosperity.org. For more information, see the website: www.businessforsharedprosperity.org.