During his presidential campaign kickoff tour of New Hampshire, Texas Gov. Rick Perry (R) signaled potential support for a temporary holiday that would allow corporations to repatriate offshore funds at a zero percent tax rate, far lower than the current 35 percent rate, under the guise of job creation. Reducing the rate to zero percent would grant the corporations a much larger tax giveaway than even they have asked for, as WinAmerica — a group of corporations lobbying for the holiday — has asked only for a “reduction” in the rate, not its complete elimination.
Not one to get outflanked on right-wing tax policy, Minnesota Rep. Michele Bachmann (R) picked up Perry’s mantle in Florida this weekend, telling attendees at one event that temporarily reducing the repatriation tax rate to zero was “the easiest thing the president could do” to immediately spur job creation, as the New York Times reported:
“American companies have sitting in the bank over a trillion dollars,” Mrs. Bachmann said. “If we had a zero rate of repatriation, by the afternoon that trillion dollars would be back in the United States. Do you have any idea of how many jobs would be created?”
If Congress’ last attempt at job creation via a repatriation holiday is any indication, however, the answer the Bachmann’s question is likely “none.” A Republican-led Congress pushed through a repatriation holiday in 2004 only to see it fail miserably, as corporations used the repatriated funds not for job creation but to pay dividends and buy stock. The corporations that benefited most from the holiday actually cut thousands of jobs in its aftermath, then stashed even more money overseas under the assumption Congress would approve similar holidays in the future.
Kristin Forbes, a professor at the Massachusetts Institute of Technology and a member of former President Bush’s council of economic advisers, said the holiday “didn’t accomplish it’s stated goals of bringing jobs and investment to the U.S.”
The corporations behind WinAmerica, meanwhile, continue to pay low effective tax rates and shield the public from information about how many jobs they have shipped overseas, all while they push a policy that would cost American taxpayers more $80 billion over the next decade. By endorsing a rate even lower than what the corporations are asking for, Bachmann is ensuring that the price tag on a policy that won’t create jobs would only be more expensive.