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The $104 Billion Refund - The most absurd corporate tax giveaway of 2005.
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| Contributor | RP |
| Last Edited | RP Apr 21, 2006 10:01pm |
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| Category | Commentary |
| News Date | Thursday, April 13, 2006 05:35:00 PM UTC0:0 |
| Description | IBM, for example, is banking a $2.8 billion refund—well, better to call it a "tax savings"—because instead of paying the normal corporate tax rate of 35 percent on $9.5 billion in profits it earned overseas, the company paid only 5.25 percent. That's the magic of the American Jobs Creation Act, a piece of legislation that passed with comfortable margins in both the House and the Senate and was signed into law by President Bush just two weeks before the 2004 elections.
"It basically gave money to corporations in return for corporate contributions," says Bob McIntyre, director of Citizens for Tax Justice. As for the law's name, McIntyre says that Congress was "just kidding." One of the few groups that believes the legislation has led to the creation of jobs is the American Shareholders Association, a spinoff of Americans for Tax Reform, led by conservative activist Grover Norquist. In a report last month, the American Shareholders Association said that stock buybacks, dividends and mergers, and acquisitions were up sharply because of the legislation and that this in turn had led to the creation of 500,000 high-paying jobs in the United States.
Not so far. Some companies taking advantage of the generous tax break haven't even tried to hide their layoffs. In January 2005, on the same day it announced it was cutting 6 percent of its workforce, National Semiconductor said that it was repatriating $500 million under the American Jobs Creation Act. Colgate-Palmolive, which in December 2004 announced plans to cut more than 4,000 jobs, brought back $800 million in overseas profits last year. The Wall Street Journal reported in December that the combination of repatriation and job cuts prompted Amalgamated Bank, which owns Colgate shares, to file a shareholder resolution arguing that the company's brand and reputation would be damaged by such moves. |
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