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“Please, please,” wailed lobbyists for many of America’s largest multinational corporations in 2004, “let us come home!”
Well, it was actually their foreign profits they wanted to bring into the Good Ol’ USA. But, as with most things corporate, they wanted a tax break to repatriate this money. The Bushites and Congress – always sympathetic to corporate cries – responded with a big one. The patriotically named “Homeland Investment Act” was quickly passed. It allowed these global giants to stash some $300 billion in foreign profits in their US bank vaults, but let them pay only one-seventh the tax rate that would normally be applied to the profits.
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The rationalization was that these corporate patriots would not use this windfall to enrich big shareholders (including their top executives), but would invest in new American jobs. Indeed, the law specifically prohibited the profits from going to shareholders through increased dividends and stock buy-backs. The corporations promised that this tax giveaway was all about new investments in America and jobs for working families.
They lied. In a new study by a very conservative, private group, called the national Bureau of Economic Research, analysts found that of all the profits that corporations brought into our country under the special tax break, 92 percent went to enrich the shareholders! The study says bluntly that the tax giveaway “did not lead to an increase in domestic investment, employment or R&D.”
But, what about the law’s outright prohibition on putting the money into shareholders’ pockets? As one of the study’s authors put it in an interview, those legal restrictions “seem to have been completely ineffective.”
Ineffective? In other words, the corporate chieftains simply snubbed their noses at the clear language of the law. They took our money and ran. Shouldn’t they be forced to pay back the billions they got from this tax giveaway? And… shouldn’t some of them be in jail?
“Tax Break For Profits Went Awry,” The New York Times, January 5, 2009.