Several multinational corporations have been waging a lobbying campaign in an attempt to sucker Congress into approving whats known as a tax repatriation holiday. This holiday would allow corporations that have stashed money offshore to bring it back to the U.S. at a dramatically lower rate. (Usually, companies repatriating money pay the statutory 35 percent corporate income tax rate.)
As we documented, several of the companies lobbying for this tax break already pay exceedingly low taxes. One of them — mega-manufacturer Boeing — hasn’t paid any federal income tax in three years. Google, which is also part of the lobbying binge, paid just 2.4 percent in taxes last year thanks to extensive use of offshore tax havens and loopholes. And as Bloomberg noted today, Cisco wants a huge tax break on repatriated earnings despite dodging $7 billion in taxes over the last five years:
Cisco Systems Inc. has cut its income taxes by $7 billion since 2005 by booking roughly half its worldwide profits at a subsidiary at the foot of the Swiss Alps that employs about 100 people.
Now Cisco, the largest maker of networking equipment, wants to save even more — by asking Congress to waive most federal taxes due when multinationals bring such offshore earnings home. Chief Executive Officer John T. Chambers has led the charge for the tax holiday, which would be the second since 2004.
The companies pushing for a repatriation holiday — and the congressional Republicans supporting them, including House Budget Committee Chairman Paul Ryan (R-WI) — claim the tax break will spur the companies into investing domestically and creating jobs. But Congress tried an identical ploy in 2004, to the exact opposite effect.
The companies that benefited the most wound up cutting jobs, and corporations pushed even more money and investment overseas, in the hopes that another tax holiday would be granted before too long. And 92 percent of the money that the companies brought back went to enriching shareholders and executives, not job creation. Kristen Forbes, who was on President Bush’s Council of Economic Advisers when the last repatriation holiday was approved, said the holiday “didn’t accomplish the stated goals of bringing jobs and investment to the US.’’ But tax dodging corporations want another one approved anyway, promising that this time things will be different.