Corporations Demand Tax Holiday for Wealthy That Didn’t Work Before
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The nation’s richest are trying to sell us on yet another shell game to keep from paying their fair share of taxes. Their lobbyists are pushing a so-called repatriation tax holiday—a huge cut in the tax rate on money companies are holding outside of the country.
The trick here is that we tried this before and it didn’t work out so well for taxpayers, so of course they want to do it again.
Dave Johnson, writing for the Campaign for America’s Future, spells out how this shell game works: companies manufacture a product in China or some other low-wage country and then sell and resell it through another shell company in a tax haven like the Cayman Islands. That shell then sells it to the U.S. company at a high price. So the profit is in the Caymans, where the cost was low and the sell price was high. And the U.S. company, which made a little profit, pays a low tax. Researchers say this shell game costs taxpayers $100 billion a year.
As long as the actual money isn’t brought into the United States, the company’s owners–the very rich (see chart above) don’t pay U.S. taxes on it. So after years of this scheme, a ton of cash—about $1 trillion– is sitting in these tax-haven countries. But the rich can’t use the cash to buy mansions, yachts and whatever else in the United States, if it’s sitting in a bank in the Caymans, but they don’t want to taxes on it.
So their lobbyists are trying to get Congress to pass a “repatriation tax holiday” on the profits they are holding outside of the country. They claim bringing the money home at a reduced tax rate would create jobs. But we’ve been burned once by that scheme. In 2004 Congress let corporations bring profits back to the U.S. at a tax rate of 5.25 percent, instead of the top corporate rate of 35 percent.
And the companies that got the money kept on cutting jobs and used the money to repurchase stock or pay dividends — and to send more jobs overseas according to the Congressional Research Service.
So, rather than trying to balance the budget by cutting services, Congress should look at figuring out way to put that $100 billion to work for ordinary Americans and not the very wealthy.
Click here to read Johnson’s full column, “Lobbyists Admit Corporate Tax ‘Holiday’ Didn’t Work, But Demand It Again.”
Economy Adds 431,000 Jobs—Barely Enough to Stay in Place
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Some 431,000 net new jobs were created in May. A whopping 411,000 of those new jobs were temporary U.S. Census jobs, while private employers added only 41,000 new jobs in May. Overall, the unemployment rate dropped to 9.7 percent, down from 9.9 percent in April, according to a report released this morning by the U.S. Department of Labor.
AFL-CIO President Richard Trumka said the low number of private-sector jobs is further evidence the recovery is still fragile.
The Economic Recovery Act saved us from a second Great Depression, but it was not sufficient to power strong and sustained job growth, and its effects are expected to wane in coming months.
He called on Congress to do more to create jobs and sustain the recovery.
Most immediately, Congress must move quickly to restore health care benefits for the unemployed and provide aid to states to maintain jobs and vital services. We already see state and local governments shedding 22,000 jobs in May. Without further action to offset state budget shortfalls, these job losses will offset temporary gains from federal spending.
Tire Industry Jobs Returning After Obama Enforces Trade Laws
Less than three months after President Obama enforced U.S. trade law and provided relief to the domestic tire industry in response to surging exports of tires from China, there are signs the tire industry is rebounding.
Writing on the Campaign for America’s Future website, Dave Johnson reports that Cooper Tires is adding 100 new jobs to its plant in Findlay, Ohio, where unemployment is 9.1 percent. He quotes Findlay’s Mayor Pete Sehnert who told Toledo on the Move.com:
That’s 100 more people working. That’s 100 more people spending their money in our community, paying their bills, paying their taxes so it means a lot.
David vs. Goliath: The Fight Begins for Reform of the Financial Industry
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Most Americans want strong regulation of our nation’s financial markets, according to a poll released today by Americans for Financial Reform (AFR), a coalition of nearly 200 investors and civil rights and community organizations.
The poll, conducted by Lake Research Partners, surveyed 900 likely voters in 77 “Blue Dog” or conservative Democratic districts and those in politically competitive Democratic districts.
More than two-thirds of voters in all the districts support creating the Consumer Financial Protection Agency (CFPA) to “create and enforce a strong set of rules to require fair, affordable, understandable and transparent financial products like bank loans, mortgages and credit cards for families and small businesses.”
When asked if there was too much, too little or just the right amount of regulation of banks, the stock market and credit card companies, voters agreed, by a 23-point margin, there’s too little rather than too much regulation.
