'Tax holiday' corporations slash jobs

You can bet corporate lobbyists are doing everything they can right now to convince the supercommittee that they need a tax holiday for overseas profits. They'll argue that would create jobs here. They will be wrong.

Bloomberg reported yesterday,

(Sen. Kay) Hagan, a Democrat from North Carolina, and (Sen. John) McCain, an Arizona Republican, said today they will sponsor a bill to let U.S. companies bring home as much as $1.4 trillion of overseas profits at a reduced tax rate.

Large multinational companies including Pfizer Inc., Apple Inc. and Cisco Systems Inc. have been lobbying Congress to let them return overseas profits to the U.S. at a lower rate. The companies say the infusion of cash would boost the economy and lead to increased employment. Corporate profits now are taxed at a top rate of 35 percent.

The congressional Joint Committee on Taxation has estimated that a tax holiday would cost the Treasury $78.8 billion in forgone revenue over 10 years.

Not only that, it would cost jobs. The Institute for Policy Studies just issued a report showing companies that took advantage of a tax holiday in 2004 cut tens of thousands of jobs here in the U.S.

Reports IPS,

The federal government has already gone the "tax holiday" route — in 2004 — with disastrous results.

Congressional advocates for that 2004 "onetime" holiday made the same arguments that repatriators are making today. They promised that the tax holiday would create jobs. In fact, they even named their holiday legislation the "American Job Creation Act of 2004." But their holiday didn't just fail to create the promised jobs. Their holiday enriched corporations that actually destroyed jobs in the months right after they received their tax windfall.

One government study looking at the first two years after the repatriation windfall found that 12 of the top recipients laid off more than 67,000 American workers. These firms collectively brought back home more than $100 billion, nearly a third of the total amount repatriated by all firms that took advantage of the tax holiday. Collectively, these early job killers pocketed an estimated $32 billion in savings from taxes they otherwise would have had to pay.

A review of U.S. employment data filed with the Securities and Exchange Committee found that 13 firms profiled in this report cut their U.S. workforces by 60,701 jobs in the two years following the 2004 tax holiday (2004-2006). The 13 companies are YUM Brands, General Electric, International Paper, Eastman Kodak, Kraft, Honeywell, Intel, Eli Lilly, Starwood Hotels, Praxair, Lexmark International, Hasbro and Boston Scientific.

There's a reason people are Occupying Wall Street.