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Tax amnesty creates jobs, right?
July 27, 2007 1:30 AM

Wrong!


Two years ago, when companies received a big tax break to bring home their offshore profits, the president and Congress justified it as a one-time tax amnesty that would create American jobs.

In theory, companies are only deferring taxes on the profits they shelter overseas, not permanently avoiding tax. If they bring the money back to the United States to distribute to their shareholders, they still have to pay American taxes on it.

But those rules were temporarily suspended when President Bush signed legislation in 2004 to let companies return overseas profits at a rate of 5.25 percent, far below the official tax rate of 35 percent, if they moved the money back by 2006.

This is a very common canard among the wealthy ruling class. They claim that if we just give them more money, they'll turn around and hire more workers. Well, we now have the results back from one industry that was given a $100 billion gift from U.S. taxpayers:

Drug makers were the biggest beneficiaries of the amnesty program, repatriating about $100 billion in foreign profits and paying only minimal taxes. But the companies did not create many jobs in return. Instead, since 2005 the American drug industry has laid off tens of thousands of workers in this country.

There really is nothing more despicable than companies using the infrastructure of our system to make gobs of money (which go disproportionally into CEO's pockets) while simultaneously shirking their responsibility to contribute back into it:

Drug makers are not the only American multinationals using tax loopholes to declare large portions of their income beyond the reach of the Internal Revenue Service. The Brookings Institution estimates that multinational companies are using overseas tax shelters to lower their payments to the Treasury by about $50 billion a year.

$50 billion a year in lost tax revenue. Perhaps if it were characterized as money stolen from taxpayers pockets it would get more press?

Some small examples:

Last year, for example Eli Lilly, the sixth-largest American drug maker, paid less than 6 percent of its profits of $3.4 billion to the United States government, according to its financial statement.

Amgen, the American biotechnology giant, which reported last year that 80 percent of its $14.3 billion in sales occurred in this country, paid about 22 percent in United States federal tax on its $4 billion in profits.

With this priceless money quote coming from H. David Rosenbloom, director of the international tax program at New York University:

"Congress can swear on two stacks of Bibles that it'll never do it again," Mr. Rosenbloom said, "but they've lost their virginity."

Well put, Mr. Rosenbloom...

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