GOP 2012 presidential hopeful Michele Bachmann has made no secret of her desire to slash corporate taxes. She has called for cutting the corporate income tax rate from 35 percent to 9 percent (at a cost of more than $2 trillion), said she is “open to” eliminating the corporate income tax entirely, and has endorsed letting corporations bring money that they have stashed offshore back to the U.S. without paying any taxes on it (when they would usually pay 35 percent).
Bachmann doubled down on her desire to allow companies to bring back (or repatriate) money at a low tax rate at a town hall yesterday, claiming that such a move would “butter up the economy,” bringing with it “a true stimulus”:
Overnight, we could have a true stimulus in this country. $1.2 trillion which, by the way, that’s still a lot of money. We could bring that money in almost overnight and that money could come here in the United States and it could buy more machines, and it could hire more employees, and have more research and more development, and buy more technology. In other words, butter up the economy so we could actually have more job creation.
At its height, the American Recovery and Reinvestment Act — the actual stimulus — was supporting 3.6 million jobs. It was still supporting 2.9 million jobs over the summer. Bachmann’s stimulus plan, meanwhile, has already been tried, with underwhelming results.
As we’ve pointed out many times before, Congress approved a repatriation tax holiday in 2004, with the justification that corporations would use the repatriated money to create jobs. Instead, they used it to pay dividends and buy stock. The corporations that benefited most from the holiday wound up cutting thousands of jobs in the following years, and then stashed more money overseas under the assumption Congress would approve another holiday someday.
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 Congressional Research Service also studied the tax holiday, and “found no evidence that the tax break resulted in ‘a corresponding increase in domestic investment or employment.’” So this is Bachmann’s “true stimulus”: giving corporations tax breaks in order for them to not create jobs.