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Would a corporate "tax holiday" boost the U.S. economy?
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| Contributor | RP |
| Last Edited | RP Nov 07, 2017 10:12am |
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| Category | Analysis |
| Author | Rachel Layne |
| News Date | Tuesday, November 7, 2017 10:15:00 AM UTC0:0 |
| Description | Would a so-called tax holiday for U.S. corporations, as proposed under the Republican tax bill, create more jobs and otherwise spur economic growth?
The 2004 American Jobs Creation Act temporarily slashed taxes on repatriated earnings, or profit companies make from foreign operations that they bring back to use inside the U.S., from 35 percent to 5.25 percent. About 9,700 companies took advantage of the tax break, bringing back $312 billion. Fifteen companies, led by Pfizer, Merck and Hewlett-Packard, accounted for 52 percent of the repatriated money.
Instead of expanding operations or hiring, the 364 firms that repatriated the lion's share of the money mostly raised their spending on stock repurchases, which tends to disproportionately benefit wealthier investors, a 2008 study found. A Congressional Research Service report that analyzed the tax holiday several years later also concluded that the corporate tax cut "did not increase domestic investment or employment." |
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