Posted by AzBlueMeanie:
The New York Times published this interesting editorial opinion, Fool Me Twice?:
In 2004, America’s multinational corporations offered Congress a deal: They would repatriate hundreds of billions of dollars in foreign profits — to invest in new plants and create new jobs at home — in exchange for a break from the 35 percent corporate tax rate imposed on overseas profits when they are brought into the country.
A Republican-controlled Congress leapt at it, passing the Homeland Investment Act, which allowed companies to repatriate some $300 billion in 2005 and pay only 5.25 percent in taxes. As for all of those promised factories and jobs, they did not materialize. Research by three prominent economists, including Kristin Forbes, a former top economic adviser to President George W. Bush, found that between 60 and 92 cents of every dollar brought home found its way into shareholders’ pockets.
The law required that companies use the repatriated money for productive purposes like research and hiring. That did not matter.
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American multinationals are at it again. In an op-ed article in The Wall Street Journal, the chief executive of Cisco, John Chambers, and the president of Oracle, Safra Catz, estimated that American companies have about $1 trillion in profits stashed abroad that they could repatriate for the greater good of the American economy if taxes on that money were lowered to about 5 percent.
Congress should not be fooled again. Tax amnesties are extremely expensive. And what big corporation will ever repatriate profits at the standard rate when every few years it can expect to get another “special” break?
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The Obama administration has given no sign of being interested in this deal. If lawmakers want to help all businesses invest more here, they should embrace the administration’s call to let companies immediately write off the entire cost of their investments in facilities and equipment, rather than gradually amortize them.
Republicans in Congress oppose President Obama’s proposal and support the tax holiday for foreign profits. Their priorities have not changed.
At both the state and federal level there is much Republican talk about having to lower the corporate tax rate to spur business investment and job creation, despite all the evidence to the contrary of The new corporate business model: increase profits, not jobs; UPDATE: The new corporate business model: increase profits, not jobs; Update II: The new corporate business model: increase profits, not jobs; Update III: The new corporate business model: increase profits, not jobs.
The corporate tax rate is meaningless when the effective income tax actually paid by most corporations is 0.00%: more than two-thirds of corporations pay no income tax at all according to the GAO. Majority of corporations avoid federal income taxes – study – Aug. 12, 2008. It sucks to have to pay $0 in taxes.
The Rachel Maddow Show addressed the unfairness of the tax code in this segment.
Transcript of Thursday, Oct. 21st – msnbc tv – Rachel Maddow show:
Do you remember exactly how much you paid in taxes last year, the dollar amount? If I asked you, can you please tell me the exact dollar amount you paid last year? Would you be able to tell me without looking it up? If you were Bank of America, you could. Bank of America paid this much in taxes last year. Bank of America paid exactly $00.00. Bank of America paid nothing in taxes last year. Another mega financial institution, Citi Bank also paid $0 in taxes, nothing. The General Electric Corporation, a.k.a. big papa around here, our parent company, GE also paid $0 in taxes. Zippo. In net of zero.
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There are lots of companies in this boat, even big ones. And it‘s not that these corporations even necessarily had a bad year last year. They all earned significant income, but none of them paid anything in taxes. $00.00, which means you, and all likely you, personally, paid more in taxes than Bank of America, Citi Bank, and GE did last year. You personally probably paid more than all of them combined.
Why is that? Because in America, it is good to be a corporation. The tax code is set up in a way that big companies [have Congress create] loopholes, and they move their revenue around, and they structure their books so that they end up netting out paying an effective tax rate a very little, very little. Like in some cases, nothing. And you can tell from our politics that politicians are counting on us not understanding that.
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It‘s 25 percent, 35 percent, 35 percent corporate taxes. And the net taxes that lots of corporations pay work out to be significantly less than 35 percent. How do you do zero as a percent of 35 per divide by—lots of Republicans running for office this year promising to cut that onerous corporate tax rate. If Bank of America, Citi Bank, GE, and lots of other corporations are already paying a net tax rate of 0. If they‘re paying $0, what exactly is cutting that tax rate going to do for them?
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It is true that a true fact that 95 percent of Americans got a fat tax cut from the Democratic stimulus bill. That is true.
But nobody believes it. On the other hand, it is not true that corporations generally pay onerous taxes in this country. In fact, many of the biggest ones paying nothing, but Republicans are counting in this election on everybody believing that the corporate tax rate is super onerous.
Don't get fooled again!