The so-called repatriation tax holiday makes the tension between corporate power and the general interest crystal clear.
US multinationals are simply shifting profits offshore – and now they want to bring them back nearly tax-free. It’s a travesty. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html.
The multinationals argue that getting this tax break will allow them to hire workers. But this argument has three problems. First, corporations have plenty of cash already. Second, we tried this kind of amnesty before, in 2004’s Great American Jobs Act Tax Caper (see Charles I. Kingson’s article in the Tax Law Review) and they just distributed the cash to shareholders. Third, if we let the multinationals get away with this money grab, they’ll be back again and again. Plus all the conventional wisdom is that small companies are the ones that create the jobs.
If this is a done deal, Congress should at least (1) push to end future deferral of U.S. tax on foreign earnings to prevent future amnesties, (2) push for a repatriation rate of 20 percent or more, and (3) reject any face-saving tracing of funds: money is fungible, and tracing it is futile.
Somebody has got to pay for government. Singling out huge multinationals for a tax break does not seem like a good idea right now.