Published on Monday, October 24, 2011 by iWatchNews.org
Wealthy Corporations with a Trillion Dollars Stashed Offshore Lobby for a 'Holiday' from US Taxes
Goaded by battalions of corporate lobbyists, members of Congress are working to give a select group of U.S. multinational firms like Apple, Oracle and Pfizer a lavish tax break on a trillion dollars stashed offshore.
Everyone is smiling in this advert from 'Win America', a coalition of corporate interests who want to 'repatriate' overseas profits -- much of it intentionally hidden from the US tax system in places like the Cayman Islands and other tax havens. Their avowed goal is to generate jobs and investment, but the offshore tax holiday was tried before, in 2004, and the lion’s share of the benefits went not to unemployed workers and their families, but to corporate shareholders and executives. No wonder they're smiling. The avowed goal is to generate jobs and investment, but the offshore tax holiday was tried before, in 2004, and the lion’s share of the benefits went not to unemployed workers and their families, but to corporate shareholders and executives.
With today’s high unemployment, and soaring costs for college, health care and other family essentials, critics are asking why an elite class of corporations and their shareholders should get a huge tax break on overseas profits.
The proposed tax holiday could cost the Treasury from $40 billion to $80 billion [3] over the next decade, and the high cost of the measure is one reason that its prospects for passage are mixed.
But 73 members of Congress, both Republicans and Democrats, have signed up as co-sponsors. And cash-rich mega corporations are pushing hard for the tax break.
A number of trade groups and corporations that would benefit have joined in a coalition called WIN America [4]. New lobbying disclosure reports show that the group and its member firms have spent millions of dollars, and employed dozens of lobbyists, to press for the tax break, according to an analysis by iWatch News.
The current rules for tax repatriation, as the process is called, are a thorn for U.S. firms that make money overseas. American companies face a 35 percent corporate income tax. Money earned offshore is taxed only by the country of origin until it is “repatriated” to the U.S., at which time an additional tax is levied to make up any difference and bring the rate to 35 percent.
The 2004 holiday allowed U.S. firms to bring their offshore profits back and pay a rate of only 5.25 percent.
“The repatriation tax break created a competitive disadvantage for domestic businesses that chose not to engage in offshore operations or investments and provided a windfall for multinationals in a few industries without benefiting the U.S. economy as a whole,” said the Democratic staff of the Senate Permanent Subcommittee on Investigations, in its Oct. 11, 2011 report [5], done in response to the new push for another tax holiday.
“I want them to pay their taxes like the rest of us,” said Sen. Carl Levin, the Democrat from Michigan whose committee compiled the report. Michigan’s unemployment remains among the highest in the country. “The rest of us don’t get a tax holiday.”
Those 843 companies brought around $362 billion home from overseas. More than half the benefits went to only 15 firms. And just five — Pfizer, Merck, Hewlett-Packard, Johnson & Johnson and IBM — retrieved $88 billion, a fourth of the funds returned.
Two sectors profited disproportionately. Drug companies brought home some 29 percent of the repatriated funds; the computer and electronics industry another 19 percent, according to an IRS analysis.
The holiday also rewarded those who were using offshore funds to dodge taxes in the first place. Among the firms most likely to participate in the tax holiday were many that regularly stash their earnings in tax havens. The countries of incorporation with the largest percentage of repatriated funds under the 2004 law included the Netherlands, Switzerland, Bermuda, Ireland, Luxembourg and the Cayman Islands.
In many cases, the money was moved through shell companies, often just mailbox drops, that had no employees or physical assets.
Intel and Coca-Cola, the Senate inquiry determined, used shell companies in the Cayman Islands. Proctor & Gamble used a holding company in Bermuda that had no physical office and no full-time employees. Eli Lilly used Switzerland and the British Virgin Islands. Oracle employed an Irish subsidiary.
Many firms used the “repatriated” money, as it is known, to launch stock buy-back efforts, boosting the value of their shares and — via stock awards to senior managers — hiking executive compensation rather than investing the money in new jobs or research and development, as the bill intended.
Because of the law’s lax safeguards, firms that took advantage of the tax break in 2004 “did not … significantly increase employment or research and development,” Dhammika Dharmapala [7], an expert on tax policy, and one of the authors of a National Bureau of Economic Research (NBER) study [8] of the 2004 holiday, told iWatch News .
Then, as now, the bill’s proponents insisted that they had included safeguards to guarantee that the benefits of the tax break would be used to create jobs and spur investment. But in the 2004 law, these measures were easily dodged.
The language of the law expressly forbade companies from using repatriated funds for stock buybacks or executive compensation. But that did nothing to keep companies from doing so. “Estimates imply that firms returned almost all of the repatriated cash to shareholders — a use that was explicitly not permitted,” the NBER study concluded. The NBER is a nonpartisan organization whose ranks of current and former members are salted with Nobel Prize-winning economists.
The NBER study [8] of all companies that cashed in on the holiday calculated that 60 percent to 92 percent of the money repatriated was used for payouts to shareholders.
“Stock repurchases and executive compensation climbed at the largest repatriating corporations, while hiring stagnated or declined,” according to the Senate committee’s study of 15 leading firms that profited from the tax break.
Drug giant Pfizer, which repatriated the single largest chunk of cash — $37 billion — announced that it was laying off thousands of employees in 2005. Yet from 2004 through 2006, according to the Senate inquiry, Pfizer repurchased over $17 billion of its stock, and awarded its five most highly compensated executives
with shares worth $30 million.
“If you’re looking for straight up, direct job creation, the evidence isn’t there,” says Michael Mundaca, until this summer the Assistant Treasury Secretary for Tax Policy in the Obama administration.
WIN spent the first 9 months of this year actively lobbying for a repatriation bill in Congress. It spent $380,000 to hire two firms (Cauthen Forbes & Williams and Capitol Counsel LLC) and target lawmakers with a total of eight lobbyists. Among the lobbyists hired directly by WIN are several people with strong ties to Congress:
WIN affiliated companies such as Pfizer ($7,340,000 overall), Qualcomm ($3,880,000 overall), Microsoft ($3,592,000 overall), Apple ($1,350,000 overall) and Oracle ($1,150,000 overall), among others, spent at least some money to lobby the issue.
The 2004 tax break was advertised and sold as a one-time deal, but the affected firms correctly perceived that after a few years had passed they could demand another round of relief, and they have stockpiled hundreds of billions of dollars overseas in anticipation of the next holiday.
While he doesn’t expect any of the bills to pass, citing the need for Congress to find offsets for the $40 billion to $80 billion it would initially cost, Mundaca sees serious dangers in having the repatriation holiday. “I think a holiday every few years is unsustainable,” he told iWatch News .
“You can’t have an important part of your tax system subject to the whims of the legislative process. I think there needs to be a decision whether this is a good idea or not, for all time, not whether it’s a good idea once every five years.”
Under the Hagan-McCain bill, firms that add workers would be rewarded and those that exploit the holiday and then lay off workers would be penalized — a new wrinkle designed to meet the criticism that several big firms which took advantage of the 2004 holiday proceeded to cut, rather than expand, their work force.
Still, the tax holiday’s defenders hail its potential as a new stimulus act.
Economist Douglas Holtz-Eakin, [11] who headed the Congressional Budget Office for two years during the Bush administration, acknowledged in a paper for the U.S. Chamber of Commerce that the 2004 act had poor safeguards, which complicates any calculation of its effects. “There is no official report on how the repatriated earnings were actually spent,” he writes, since the law “did not require companies to trace or segregate their use of repatriated funds.”
But even if the bulk of the money was spent rewarding shareholders, a trickle-down effect should have benefited everyone, Holtz-Eakin argues. Payouts to shareholders “put resources in the hands of other economic actors — firms, households, pension plans, investors, etc. — who continue the chain of real purchases and financial transfers.”
“Thus the ultimate test is not the decisions made by individual firms,” he writes. Though “the various uses of repatriated earnings may each impact the economy differently, it’s safe to say that there is no option that does not result in some degree of stimulus.”
Mundaca says there hasn’t been a deep enough analysis of the secondary impacts of buybacks and stock purchases to rule out the possibility that those helped the economy.
In a paper [12] for the nonpartisan New America Foundation, economist Laura D’Andrea Tyson and two Berkeley associates estimate that 74 percent of the money brought back to the U.S. in a tax holiday would be distributed to shareholders in the form of dividend payments or stock repurchases, and only 26 percent used for hiring and other corporate investments.
But for every dollar returned to a shareholder, Tyson says, from 25 to 40 cents will be used by high-income consumers to go shopping. This boost to the economy, when combined with direct hiring and investment by companies, could ultimately lead to the creation of between 1.3 million and 2.5 million jobs.
“Even if a large proportion of the repatriated cash is distributed to shareholders in the form of dividend payments or stock repurchases, there will be a significant increase in private spending and economic activity,” Tyson says.
And even the cut-rate taxes paid by firms repatriating money should yield enough short-term cash to let Congress finance other measures to stimulate the economy, like the infrastructure bank included in President Obama’s job package, Tyson notes. Democratic Sen. Charles Schumer of New York has reportedly tested Senate sentiment for a deal along those lines.
Tyson is a former chair of the White House Council of Economic Advisers under President Bill Clinton. She also serves on the board of directors of Kodak, a member of the WIN Coalition. Eric Schmidt, the executive chairman of Google, serves as chairman of the New America Foundation board, for whom Tyson and her colleagues did the study.
The tax break proposals are predominantly sponsored by Republicans, but three Democratic Senators and 10 Democrats in the House have signed on as co-sponsors of the two main bills. Among those Democrats who are supporting the bill are representatives from districts with high-tech and software industries, in states like Utah and Colorado. Reps. Zoe Lofgren and Anna Eshoo, whose districts encompass California’s Silicon Valley, and California Sen. Barbara Boxer, for example, support the bill.
It “rewards those who have beaten the tax system,” Kingson wrote [13]. The safeguards to guarantee job creation were just “political cover.”
“The Act is a caper, but not a funny one,” Kingson wrote. “Policy is a contest among taxpayers, and what Intel or GE or Pfizer does not pay, other people or their children will.”
Many companies that make products in America and sell them overseas could suffer in another tax holiday, according to the Congressional Research Service, if a tide of money stashed overseas in foreign currencies was converted to dollars. It could drive up the price of the dollar and “U.S. net exports may decline,” the CRS warned.
Repatriation is so tailored for a relative few, and more likely to help shareholders rather than workers seeking jobs, that four U.S. corporate chieftains urged the House Ways and Means committee to abandon the idea at a hearing [14] in May. The American tax system is in dire need of a major overhaul, said the chief financial officers of the United Technology Corp., the Kimberly-Clark Corp., Zimmer Holdings Inc. and Caterpillar Inc., but tax breaks like the repatriation holiday could give tax reform a bad name. Or, as a Goldman Sachs advisory said last month, “passage of a standalone repatriation provision could reduce momentum behind broader reform.”
The proposals for a new tax holiday have been greeted with skepticism, as well, by some conservative economists who otherwise deplore high taxes.
The Heritage Foundation, in an Oct. 3, 2011, report [15], concluded that “this sequel to a similar 2004 holiday would, like its predecessor, have a minuscule effect on domestic investment and thus have a minuscule effect on the U.S. economy and job creation.” American companies are already awash in cash, noted Heritage scholars J.D. Foster and Curtis S. Dubay. And “for those rare instances in which outside financing is needed, interest rates remain at historic lows.”
After a thorough review of the academic literature, “I have not seen an article that says this does create jobs,” Dubay to iWatch News.
The Heritage report sparked a retort [16] from Grover Norquist at Americans for Tax Reform, another conservative group, who praised the stock buybacks and higher dividends that followed the 2004 law and asked: “What’s wrong with increasing shareholder value?”
But even Norquist conceded that “Foster and Dubay are probably correct.” American firms “already have trillions of dollars in cash sitting on their balance sheets, ready to be deployed at no additional tax cost. Even companies that don’t have this liquidity could borrow at rates approaching 0 percent after inflation,” he said. “It’s unlikely that repatriation will be just what companies have been waiting for on the margin to build that next factory or invest in that new technology. They can today, and they are not.”
Everyone is smiling in this advert from 'Win America', a coalition of corporate interests who want to 'repatriate' overseas profits -- much of it intentionally hidden from the US tax system in places like the Cayman Islands and other tax havens. Their avowed goal is to generate jobs and investment, but the offshore tax holiday was tried before, in 2004, and the lion’s share of the benefits went not to unemployed workers and their families, but to corporate shareholders and executives. No wonder they're smiling. The avowed goal is to generate jobs and investment, but the offshore tax holiday was tried before, in 2004, and the lion’s share of the benefits went not to unemployed workers and their families, but to corporate shareholders and executives.With today’s high unemployment, and soaring costs for college, health care and other family essentials, critics are asking why an elite class of corporations and their shareholders should get a huge tax break on overseas profits.
The proposed tax holiday could cost the Treasury from $40 billion to $80 billion [3] over the next decade, and the high cost of the measure is one reason that its prospects for passage are mixed.
But 73 members of Congress, both Republicans and Democrats, have signed up as co-sponsors. And cash-rich mega corporations are pushing hard for the tax break.
A number of trade groups and corporations that would benefit have joined in a coalition called WIN America [4]. New lobbying disclosure reports show that the group and its member firms have spent millions of dollars, and employed dozens of lobbyists, to press for the tax break, according to an analysis by iWatch News.
The current rules for tax repatriation, as the process is called, are a thorn for U.S. firms that make money overseas. American companies face a 35 percent corporate income tax. Money earned offshore is taxed only by the country of origin until it is “repatriated” to the U.S., at which time an additional tax is levied to make up any difference and bring the rate to 35 percent.
The 2004 holiday allowed U.S. firms to bring their offshore profits back and pay a rate of only 5.25 percent.
“The repatriation tax break created a competitive disadvantage for domestic businesses that chose not to engage in offshore operations or investments and provided a windfall for multinationals in a few industries without benefiting the U.S. economy as a whole,” said the Democratic staff of the Senate Permanent Subcommittee on Investigations, in its Oct. 11, 2011 report [5], done in response to the new push for another tax holiday.
“I want them to pay their taxes like the rest of us,” said Sen. Carl Levin, the Democrat from Michigan whose committee compiled the report. Michigan’s unemployment remains among the highest in the country. “The rest of us don’t get a tax holiday.”
Benefitting the Few
There are 27 million businesses in America, and almost 10,000 have foreign subsidiaries and could qualify for the tax break. Yet only 843 of these firms took advantage of the bargain tax rates set by the 2004 law, the IRS says [6].Those 843 companies brought around $362 billion home from overseas. More than half the benefits went to only 15 firms. And just five — Pfizer, Merck, Hewlett-Packard, Johnson & Johnson and IBM — retrieved $88 billion, a fourth of the funds returned.
Two sectors profited disproportionately. Drug companies brought home some 29 percent of the repatriated funds; the computer and electronics industry another 19 percent, according to an IRS analysis.
The holiday also rewarded those who were using offshore funds to dodge taxes in the first place. Among the firms most likely to participate in the tax holiday were many that regularly stash their earnings in tax havens. The countries of incorporation with the largest percentage of repatriated funds under the 2004 law included the Netherlands, Switzerland, Bermuda, Ireland, Luxembourg and the Cayman Islands.
In many cases, the money was moved through shell companies, often just mailbox drops, that had no employees or physical assets.
Intel and Coca-Cola, the Senate inquiry determined, used shell companies in the Cayman Islands. Proctor & Gamble used a holding company in Bermuda that had no physical office and no full-time employees. Eli Lilly used Switzerland and the British Virgin Islands. Oracle employed an Irish subsidiary.
Many firms used the “repatriated” money, as it is known, to launch stock buy-back efforts, boosting the value of their shares and — via stock awards to senior managers — hiking executive compensation rather than investing the money in new jobs or research and development, as the bill intended.
Because of the law’s lax safeguards, firms that took advantage of the tax break in 2004 “did not … significantly increase employment or research and development,” Dhammika Dharmapala [7], an expert on tax policy, and one of the authors of a National Bureau of Economic Research (NBER) study [8] of the 2004 holiday, told iWatch News .
Then, as now, the bill’s proponents insisted that they had included safeguards to guarantee that the benefits of the tax break would be used to create jobs and spur investment. But in the 2004 law, these measures were easily dodged.
The language of the law expressly forbade companies from using repatriated funds for stock buybacks or executive compensation. But that did nothing to keep companies from doing so. “Estimates imply that firms returned almost all of the repatriated cash to shareholders — a use that was explicitly not permitted,” the NBER study concluded. The NBER is a nonpartisan organization whose ranks of current and former members are salted with Nobel Prize-winning economists.
The NBER study [8] of all companies that cashed in on the holiday calculated that 60 percent to 92 percent of the money repatriated was used for payouts to shareholders.
“Stock repurchases and executive compensation climbed at the largest repatriating corporations, while hiring stagnated or declined,” according to the Senate committee’s study of 15 leading firms that profited from the tax break.
Drug giant Pfizer, which repatriated the single largest chunk of cash — $37 billion — announced that it was laying off thousands of employees in 2005. Yet from 2004 through 2006, according to the Senate inquiry, Pfizer repurchased over $17 billion of its stock, and awarded its five most highly compensated executives
with shares worth $30 million.
“If you’re looking for straight up, direct job creation, the evidence isn’t there,” says Michael Mundaca, until this summer the Assistant Treasury Secretary for Tax Policy in the Obama administration.
Lobbying Hard
The financial return for lobbying in the 2004 debate was indicative of why firms have once more embraced the goal. According to one University of Kansas study [9], companies reaped $220 in tax benefits for every $1 spent on lobbying — a 22,000% return.WIN spent the first 9 months of this year actively lobbying for a repatriation bill in Congress. It spent $380,000 to hire two firms (Cauthen Forbes & Williams and Capitol Counsel LLC) and target lawmakers with a total of eight lobbyists. Among the lobbyists hired directly by WIN are several people with strong ties to Congress:
- Jim McCrery, a former Congressman who represented Louisiana’s 4 th district until 2009.
- Drew Goesl, who served as chief of staff for Rep. Mike Ross and communications director for Sen. Blanche Lincoln; Ross is a co-sponsor of the House bill.
- Tucker Shumack, a former legislative assistant for Sen. John Isakson, a co-sponsor of the Senate bill.
- Dena Battle, a former legislative director for Rep. Dave Camp, who as head of the powerful Ways and Means Committee has sway over tax policy in the U.S.
- Jeff Forbes, a former staff director on the Senate Finance Committee.
- Libby Greer, a former chief of staff for former Rep. Allen Boyd.
WIN affiliated companies such as Pfizer ($7,340,000 overall), Qualcomm ($3,880,000 overall), Microsoft ($3,592,000 overall), Apple ($1,350,000 overall) and Oracle ($1,150,000 overall), among others, spent at least some money to lobby the issue.
The 2004 tax break was advertised and sold as a one-time deal, but the affected firms correctly perceived that after a few years had passed they could demand another round of relief, and they have stockpiled hundreds of billions of dollars overseas in anticipation of the next holiday.
While he doesn’t expect any of the bills to pass, citing the need for Congress to find offsets for the $40 billion to $80 billion it would initially cost, Mundaca sees serious dangers in having the repatriation holiday. “I think a holiday every few years is unsustainable,” he told iWatch News .
“You can’t have an important part of your tax system subject to the whims of the legislative process. I think there needs to be a decision whether this is a good idea or not, for all time, not whether it’s a good idea once every five years.”
New Proposals for Congress
There are now several tax holiday proposals, embraced by both Democrats and Republicans. The Foreign Earnings Reinvestment Act [10], for example, is sponsored by Democratic Sen. Kay Hagan of North Carolina and Republican Sen. John McCain of Arizona. It would reduce the tax on repatriated earnings to 5.25 or 8.75 percent, depending on the size of a firm’s payroll.Under the Hagan-McCain bill, firms that add workers would be rewarded and those that exploit the holiday and then lay off workers would be penalized — a new wrinkle designed to meet the criticism that several big firms which took advantage of the 2004 holiday proceeded to cut, rather than expand, their work force.
Still, the tax holiday’s defenders hail its potential as a new stimulus act.
Economist Douglas Holtz-Eakin, [11] who headed the Congressional Budget Office for two years during the Bush administration, acknowledged in a paper for the U.S. Chamber of Commerce that the 2004 act had poor safeguards, which complicates any calculation of its effects. “There is no official report on how the repatriated earnings were actually spent,” he writes, since the law “did not require companies to trace or segregate their use of repatriated funds.”
But even if the bulk of the money was spent rewarding shareholders, a trickle-down effect should have benefited everyone, Holtz-Eakin argues. Payouts to shareholders “put resources in the hands of other economic actors — firms, households, pension plans, investors, etc. — who continue the chain of real purchases and financial transfers.”
“Thus the ultimate test is not the decisions made by individual firms,” he writes. Though “the various uses of repatriated earnings may each impact the economy differently, it’s safe to say that there is no option that does not result in some degree of stimulus.”
Mundaca says there hasn’t been a deep enough analysis of the secondary impacts of buybacks and stock purchases to rule out the possibility that those helped the economy.
In a paper [12] for the nonpartisan New America Foundation, economist Laura D’Andrea Tyson and two Berkeley associates estimate that 74 percent of the money brought back to the U.S. in a tax holiday would be distributed to shareholders in the form of dividend payments or stock repurchases, and only 26 percent used for hiring and other corporate investments.
But for every dollar returned to a shareholder, Tyson says, from 25 to 40 cents will be used by high-income consumers to go shopping. This boost to the economy, when combined with direct hiring and investment by companies, could ultimately lead to the creation of between 1.3 million and 2.5 million jobs.
“Even if a large proportion of the repatriated cash is distributed to shareholders in the form of dividend payments or stock repurchases, there will be a significant increase in private spending and economic activity,” Tyson says.
And even the cut-rate taxes paid by firms repatriating money should yield enough short-term cash to let Congress finance other measures to stimulate the economy, like the infrastructure bank included in President Obama’s job package, Tyson notes. Democratic Sen. Charles Schumer of New York has reportedly tested Senate sentiment for a deal along those lines.
Tyson is a former chair of the White House Council of Economic Advisers under President Bill Clinton. She also serves on the board of directors of Kodak, a member of the WIN Coalition. Eric Schmidt, the executive chairman of Google, serves as chairman of the New America Foundation board, for whom Tyson and her colleagues did the study.
The tax break proposals are predominantly sponsored by Republicans, but three Democratic Senators and 10 Democrats in the House have signed on as co-sponsors of the two main bills. Among those Democrats who are supporting the bill are representatives from districts with high-tech and software industries, in states like Utah and Colorado. Reps. Zoe Lofgren and Anna Eshoo, whose districts encompass California’s Silicon Valley, and California Sen. Barbara Boxer, for example, support the bill.
“The Great American Jobs Act Caper”
In the world of tax economists, the 2004 tax holiday is notorious as “The Great American Jobs Act Caper,” as tax expert Charles Kingson christened it, in a 2005 edition of the Tax Law Review .It “rewards those who have beaten the tax system,” Kingson wrote [13]. The safeguards to guarantee job creation were just “political cover.”
“The Act is a caper, but not a funny one,” Kingson wrote. “Policy is a contest among taxpayers, and what Intel or GE or Pfizer does not pay, other people or their children will.”
Many companies that make products in America and sell them overseas could suffer in another tax holiday, according to the Congressional Research Service, if a tide of money stashed overseas in foreign currencies was converted to dollars. It could drive up the price of the dollar and “U.S. net exports may decline,” the CRS warned.
Repatriation is so tailored for a relative few, and more likely to help shareholders rather than workers seeking jobs, that four U.S. corporate chieftains urged the House Ways and Means committee to abandon the idea at a hearing [14] in May. The American tax system is in dire need of a major overhaul, said the chief financial officers of the United Technology Corp., the Kimberly-Clark Corp., Zimmer Holdings Inc. and Caterpillar Inc., but tax breaks like the repatriation holiday could give tax reform a bad name. Or, as a Goldman Sachs advisory said last month, “passage of a standalone repatriation provision could reduce momentum behind broader reform.”
The proposals for a new tax holiday have been greeted with skepticism, as well, by some conservative economists who otherwise deplore high taxes.
The Heritage Foundation, in an Oct. 3, 2011, report [15], concluded that “this sequel to a similar 2004 holiday would, like its predecessor, have a minuscule effect on domestic investment and thus have a minuscule effect on the U.S. economy and job creation.” American companies are already awash in cash, noted Heritage scholars J.D. Foster and Curtis S. Dubay. And “for those rare instances in which outside financing is needed, interest rates remain at historic lows.”
After a thorough review of the academic literature, “I have not seen an article that says this does create jobs,” Dubay to iWatch News.
The Heritage report sparked a retort [16] from Grover Norquist at Americans for Tax Reform, another conservative group, who praised the stock buybacks and higher dividends that followed the 2004 law and asked: “What’s wrong with increasing shareholder value?”
But even Norquist conceded that “Foster and Dubay are probably correct.” American firms “already have trillions of dollars in cash sitting on their balance sheets, ready to be deployed at no additional tax cost. Even companies that don’t have this liquidity could borrow at rates approaching 0 percent after inflation,” he said. “It’s unlikely that repatriation will be just what companies have been waiting for on the margin to build that next factory or invest in that new technology. They can today, and they are not.”
Rich corporations with money offshore want a tax holiday; Sen. Carl Levin says, 'I want them to pay their taxes like the rest of us'
© 2011 Center for Public Integrity
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