Read Robert Borosage on why the so-called “tax holiday” on overseas corporate profits — as proposed by the president and likely to be made even worse when corporate lobbyists get hold of it — is really a scam:
Global corporations have managed to create a perverse tax dodge in the U.S. tax code. Any profits they make or report abroad can be squirreled away – deferred – tax-free until they are “repatriated” – brought back for use in the U.S. Large global corporations find creative ways to report billions of profits in tax havens like the Cayman Islands. Then they lobby fiercely for a one-time tax “holiday” to bring the money back home, promising it will produce jobs and investment.
The last time they pulled this scam, they got a huge tax break and the money was largely used for mergers and stock buybacks, hiking the bonuses of the executive suite and doing virtually nothing for jobs. Worse, more corporations decided they could benefit from the scam, and started reporting more of their profits abroad. Only small business and patriotic corporations face the nominal corporate tax rate of 35 percent. Now some $2 trillion dollars resides sheltered from US taxes, and the lobbying for another holiday has grown fierce.