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Proposed Tax Break for Multinationals Would Be Poor Stimulus
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Jan 31, 2009 07:27pm |
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| Category | Analysis |
| News Date | Saturday, January 31, 2009 01:00:00 AM UTC0:0 |
| Description | "Dividend Repatriation Tax Holiday" Failed in 2004, Unlikely to Work Now
Updated January 30, 2009
by Chye-Ching Huang and Robert Greenstein
Relying on a study funded by the business-backed American Council for Capital Formation,[1] some business groups have proposed resurrecting, as a stimulus measure, the 2004 “dividend repatriation tax holiday” – which allowed firms to bring their foreign-generated profits back to the United States at a greatly reduced tax rate. The Joint Committee on Taxation estimates this proposal would cost $16 billion over ten years.[2]
Yet the evidence shows that the 2004 tax holiday did little more than give windfall profits to a small number of large multinational corporations and did not lead to increased investment and jobs in the United States. Indeed, as a recent Goldman Sachs analysis concluded, this idea is more likely to help corporations’ balance sheets than to stimulate demand.[3]
Resurrecting the tax holiday would also encourage corporations to shift profits and jobs out of the United States by increasing the tax advantages of foreign over domestic investment. That is why Congress, when it enacted the 2004 measure, explicitly stated that it should be a one-time only tax break that should not be repeated.
What Is a Dividend Repatriation Tax Holiday? |
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