A group of multinational corporations — operating under the banner of a campaign called “WinAmerica” — have been pushing for the enactment of a tax repatriation holiday. Such a holiday would allow companies to bring money they have stashed overseas back to the U.S. at a dramatically lower tax rate, rather than the 35 percent that they would usually pay.
The rationale for a repatriation holiday is that the corporations will use their tax-free dollars to invest in the U.S. and create jobs. But Congress tried a repatriation holiday in 2004, and the companies that benefited the most wound up cutting hundreds of thousands of jobs and moving even more dollars offshore, in anticipation of future holidays.
The failed history of repatriation is well known to General Electric CEO Jeff Immelt, who is the head of President Obama’s Council on Jobs and Competitiveness. Immelt said on CBS’ 60 Minutes last night that the 2004 holiday didn’t create jobs. However, he thinks that another repatriation holiday should be enacted anyway:
IMMELT: When it happened last time, it didn’t [create jobs].
LESLEY STAHL: Right.
IMMELT: So there’s plenty of evidence that says that I’m not right about that. In other words, do I know how many jobs it’s going to create? I don’t. But it can’t intellectually be any good to anybody to have $1.2 trillion outside the U.S.
To hear Immelt tell it, a repatriation holiday is the only way anything can come of the trillions that America corporations have stashed overseas. But that isn’t true. As Citizens for Tax Justice has pointed out, ending the practice of “deferral” — which allows companies to indefinitely postpone taxes on overseas profits — would achieve the same ends without resulting in a corporate giveaway.
For months, Republicans and America’s corporate titans have been coalescing around the idea that a repatriation holiday would spur job creation. But history — and Immelt’s own admission — show that this simply isn’t true.