Portland observer. (Portland, Or.) 1970-current, October 19, 2011, Page 20, Image 20

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    Page 20
^Jorflaitò OObserver
O ctober 19, 2011
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Job Destroyers Don’t Deserve a Tax Holiday
Congress should
pay attention
S arah A nderson
and C huck C ollins
by
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A coalition of big businesses is
waging a campaign for a massive tax
holiday on corporate profits stashed
overseas. Its lobbyists claim that
this windfall would create millions
of jobs. If our lawmakers buy that,
they've got very short memories.
Just seven years ago, big Ameri­
can corporations made the exact
same promises. Congress gave them
a tax holiday that allowed 843 com­
panies to reduce their tax rate from
35 percent to 5.25 percent on $312
billion in offshore profits.
What did Americans get in re­
turn? Our organization, the progres­
sive Institute for Policy Studies,
released a report this month show­
ing that 58 companies that received
70 percent of the tax windfalls didn't
boost employment. In fact, they
actually destroyed a total of nearly
600,000jobs.
Almost simultaneously, the con­
servative Heritage Foundation re­
leased a paper with the same con­
clusion: Tax holidays don't create
jobs. When think tanks from the left
and the right agree on something,
Congress should pay attention.
But we're up against powerful
forces.
A coalition called Working to
Invest Now in America, which goes
by the slick name WIN America, has
deployed more than 160 lobbyists,
and spent at least $50 million, to win
a tax holiday on more than $ 1 trillion
in offshore funds that might get
repatriated if Uncle Sam grants this
tax break. Lawmakers in both the
House and the Senate have intro­
duced bills that would do just that.
The Senate version, unveiled in
early October, would give the deep­
est tax discounts to firms that create
jobs, but that requirement only ap­
plies for one year. We need jobs that
last, not positions that could vanish
after the nation's supposed job cre­
ators get their huge tax windfall.
Some executives argue that with­
out the tax holiday, these global
firms would keep their cash offshore
permanently, and it's better for Uncle
Sam to get something rather than
nothing. N evertheless, offering
such drastic tax discounts sets a
dangerous precedent.
Back in 2004, the corporate lob­
byists argued that the holiday would
be a "one-time" deal. But after they
won that round, they turned around
and began amassing their offshore
stashes once again. They must have
counted on getting more tax holi­
days.
A tax holiday for job destroyers
isn't only a waste o f taxpayer money
at a time of urgent needs. It hurts
small businesses and other firms
that operate only domestically. What
sense does it make to give global
companies deep discounts on their
IRS obligations while these small,
yet strong, engines of job creation
face standard tax rates?
There are many things that we
can do to strengthen the U.S.
economy and spur job growth. But
providing subsidies to companies
whose business model is based on
minimizing labor costs, sending prof­
its offshore, and dodging taxes isn't
a good strategy. These companies
may compensate their CEOs lav­
ishly and deliver value to share­
holders, but they aren't in the busi­
ness of creating jobs.
The WIN America campaign
leader that stands to gain the most
is Pfizer. The pharmaceutical giant
was the leading beneficiary of the
2004 tax holiday when it toted $40
billion in foreign funds back to the
United States.
And what did Americans get for
Pfizer's subsidy? Instead of creat­
ing jobs, the firm proceeded to scrap
more than 58,000 jobs in the years
since that holiday.
Today, Pfizer is holding more than
$48 billion in profits offshore. Will
Congress be fooled again?
Sarah A nderson a n d Chuck
Collins write fo r the Institute fo r
Policy Studies.
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