by EYDER PERALTA
Bloomberg has a story worth reading, (story below) today. They report that Google, Apple and Cisco Systems' lobbying for a tax holiday on offshore profits has just received a big gun.
Bloomberg reports that the technology firms have hired Jeffrey Forbes, "once chief of staff to Max Baucus, chairman of the tax-writing Senate Finance Committee" to lobby for a tax break on more than $1 trillion in profits made in foreign countries.
Through an analysis, Bloomberg found that the companies have hired more than 160 lobbyists for the task that could cost the U.S. government $78.7 billion over ten years. Bloomberg has also put together this handy graphic that shows all of the Capitol Hill connections. (Again, it's a pretty comprehensive piece that's worth a click over for.)
What the tech firms argue is that a tax holiday would flood the country with new money that would help spur a sagging economy. The United States did that in 2004.
Needless to say, the move has its critics. The U.S. Treasury put together analysis of what the tax holiday did in '04. Michael Mundaca, the Assistant Treasury Secretary for Tax Policy, wrote in March:
Although advocates argue that a repatriation holiday could be costless or even raise tax revenue, the official Congressional scorekeeper, the Joint Committee on Taxation, estimated before enactment that the 2004 repatriation holiday would actually cost billions of dollars. In 2009, when this idea was being pushed once again, Senator Baucus indicated during Floor debates that the cost of a new holiday had increased to $30 billion, presumably because a second holiday would encourage further erosion of the U.S. tax base through shifting of profits overseas. Moreover, according to outside estimates, just five firms got over one-quarter of the tax benefits of the repatriation holiday, and just 15 firms got more than 50 percent of the benefits. To pay for giving this large tax cut once again to a small group of U.S. companies without increasing the deficit, we would have to raise taxes on other U.S. businesses.
In assessing the 2004 tax holiday, the nonpartisan Congressional Research Service reports that most of the largest beneficiaries of the holiday actually cut jobs in 2005-06 – despite overall economy-wide job growth in those years – and many used the repatriated funds simply to repurchase stock or pay dividends. Today, when U.S. corporations have ready access to cash they have accumulated and are holding here in the United States, it is even harder to make the case that a repatriation holiday will unlock new investment and job creation.
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BLOOMBERG
Google Joins Apple in Push for Tax Holiday
Google Joins Apple in Push for Tax Holiday
by Richard Rubin and Jesse Drucker - Sep 28, 2011 11:01 PM CT
Sept. 30 (Bloomberg) -- Apple Inc. and Google Inc. are leading a coalition of multinationals lobbying for a repeat of the 2004 tax holiday that allowed companies to bring home offshore earnings at a tax rate of 5.25 percent, instead of the current 35 percent. More than 160 lobbyists, including 60 who once worked for Congress or the administration are pushing for the tax holiday on more than $1 trillion in offshore profits. Critics say the move will cost the government almost $78 billion.
Data compiled by Bloomberg News show more than 160 lobbyists, including at least 60 who once worked for a sitting member of the House or Senate, pushing for the repatriation holiday. Graphic: Bloomberg
As a coalition led by Apple Inc. (AAPL), Google Inc. (GOOG), and Cisco Systems Inc. (CSCO) presses for a tax holiday on more than $1 trillion in offshore profits, it is turning to a well-positioned lobbyist: Jeffrey Forbes, once chief of staff to Max Baucus, chairman of the tax-writing Senate Finance Committee.
Data compiled by Bloomberg News show that Forbes is part of an army of more than 160 lobbyists, including at least 60 who once worked for a sitting member of the House or Senate, pushing for the repatriation holiday. Their job is to persuade Congress to establish a tax break estimated to cost the U.S. government $78.7 billion over the next decade.
Independent studies have found that the last time this tax break was tried, in 2004, the bargain rate for bringing home offshore profits did little to spur hiring or domestic investment. Most of the money was used to buy back stock.
“This is an issue that involves a whole lot of people hired by corporations that are pushing for those corporate interests rather than the public interest,” said James A. Thurber, director of the Center for Congressional and Presidential Studies at American University inWashington.
Though the studies found that money brought home in 2004 ended up benefiting a narrow set of shareholders, support is growing in Congress for the tax holiday as companies expand their roster of lobbyists. One case they are making is that the potential flood of cash will boost the faltering U.S. economy.
Complex Issues
“There are many issues that are very important but are complex and don’t seem of great importance to the wider public - - those are the issues primed for having people who formerly worked on the Hill or executive branch intervening in making policy,” Thurber said.
Those with Capitol Hill connections who are lobbying for the repatriation tax break include former Louisiana Representative Jim McCrery, who until 2009 was the top Republican on the U.S. House’s tax-writing Ways and Means Committee; Dena Battle, the former legislative director for that committee’s current chairman, Representative Dave Camp, a Michigan Republican; and at least four former staffers for House Speaker John Boehner.
Michael Steel, a spokesman for Boehner, an Ohio Republican, said former staff members don’t influence policy. “The speaker makes such decisions based on what is best for his constituents and the American people,” Steel said.
‘Regenerate the Economy’
Advocates for the break say a repatriation holiday would bring more than $1 trillion to the U.S. now held overseas.
“It would do much to regenerate the economy,” said Robert Livingston, a former Republican chairman of the House Appropriations Committee and speaker-designate who is now lobbying for Oracle Corp. (ORCL) “A total of $1.5 trillion from all affected U.S. companies would go a long way to pull us out of the doldrums.”
There are more insiders pushing for the tax holiday than those in Bloomberg News’ tally of at least 60. That figure includes only registered lobbyists who worked for a sitting member of Congress and disclosed lobbying on the issue for the WIN America Campaign, the group ofcompanies seeking the break, or for one of the companies or associations in the coalition.
WIN America is coordinated by SKDKnickerbocker, a Washington political consulting and public relations firm, which includes as a managing director Anita Dunn, former communications director for President Barack Obama. Dunn isn’t a registered lobbyist.
Longtime Fixtures
The list of more than 160 lobbyists includes other longtime fixtures in Washington, such as former Representative Livingston; Democratic fundraiser Tony Podesta; and Kenneth Kies, former chief of staff of the congressional Joint Committee on Taxation.
The proposed break has gained momentum in recent months, with several prominent Democrats, including Senator Charles Schumer of New York, expressing a willingness to consider the tax holiday. Meanwhile, Republican presidential candidates Michele Bachmann, a House member from Minnesota, and Texas Governor Rick Perry have called on Congress to let companies bring home offshore earnings at a reduced tax rate.
The Obama administration has said it is opposed to a stand- alone tax holiday for repatriated profits, pointing to the 2004 experience. Obama has been taking aim at tax breaks benefiting certain industries, such as oil and gas, and deductions and exclusions claimed by millionaires. He has embraced changes suggested by billionaire Warren Buffett, who has said he pays taxes at a lower rate than his secretary.
U.S. multinational companies have amassed more than $1.375 trillion in profits overseas on which they have paid no federal income tax, according to a recent report by JPMorgan Chase & Co. (JPM) When the earnings are returned to the U.S. -- or repatriated -- they are taxed at the top corporate rate of 35 percent, with credits for foreign income taxes paid.
Reprising 2004 Holiday
The companies are pushing to reprise the 2004 holiday that allowed them to bring home offshore earnings at a low tax rate of 5.25 percent. Under that break, companies repatriated to the U.S. $312 billion, largely for stock repurchases rather than direct hiring or investment, according to a recent paper in the Journal of Finance, the latest in a series of studies that reached similar conclusions.
The proposed holiday would reward the companies that have most aggressively parked profits in tax havens such as Bermuda, the Cayman Islands and Switzerland, said Martin A. Sullivan, a former Treasury Department economist and contributing editor for the non-partisan Tax Notes.
“A lot of what companies report as foreign profit is really U.S. profit that should be subject to U.S. tax,” Sullivan said. “Those earnings didn’t get overseas by accident. Many of these companies intentionally put them there to avoid paying U.S. taxes.”
Tally of Lobbyists
Bloomberg’s tally covers individuals who were registered to lobby on the repatriation issue at some point in the first half of this year, the period for which records are available. Some of the lobbyists have since left their firms. The figures don’t include those who were listed as lobbying on general tax issues for companies in the WIN America coalition, except where the lobbyists confirmed to Bloomberg News that they were working on repatriation.
Newer members of the revolving-door community are involved, such as Danielle Maurer, a lobbyist at the Republican firm of Fierce, Isakowitz & Blalock. It has been paid $160,000 so far this year by Oracle to lobby on a variety of tax issues, and the Win America coalition recently hired the firm. Maurer had been director of member services for Boehner, helping assign House members to committees.
Baucus Alumni
In all, three former staffers of Baucus, the Finance Committee’s chairman since 2007, are lobbying on the repatriation holiday. Besides Forbes, there’s Nick Giordano of Washington Council Ernst & Young, a longtime Cisco lobbyist. Microsoft has retained Timothy E. Punke, a former adviser to Baucus on trade issues who is active in Democratic politics.
The WIN America campaign’s manager is Karen Olick, former chief of staff to Senator Barbara Boxer, a California Democrat. One of the spokesmen for the group is Doug Thornell, who most recently was a staffer for Representative Chris Van Hollen, a Maryland Democrat who is a member of the House leadership. Like Anita Dunn, Thornell and Olick aren’t registered lobbyists.
“Our economy needs all the help it can get, and leaving this money in foreign banks when we could bring it home now makes no sense,” Thornell said.
As a coalition led by Apple Inc. (AAPL), Google Inc. (GOOG), and Cisco Systems Inc. (CSCO) presses for a tax holiday on more than $1 trillion in offshore profits, it is turning to a well-positioned lobbyist: Jeffrey Forbes, once chief of staff to Max Baucus, chairman of the tax-writing Senate Finance Committee.
Data compiled by Bloomberg News show that Forbes is part of an army of more than 160 lobbyists, including at least 60 who once worked for a sitting member of the House or Senate, pushing for the repatriation holiday. Their job is to persuade Congress to establish a tax break estimated to cost the U.S. government $78.7 billion over the next decade.
Independent studies have found that the last time this tax break was tried, in 2004, the bargain rate for bringing home offshore profits did little to spur hiring or domestic investment. Most of the money was used to buy back stock.
“This is an issue that involves a whole lot of people hired by corporations that are pushing for those corporate interests rather than the public interest,” said James A. Thurber, director of the Center for Congressional and Presidential Studies at American University inWashington.
Though the studies found that money brought home in 2004 ended up benefiting a narrow set of shareholders, support is growing in Congress for the tax holiday as companies expand their roster of lobbyists. One case they are making is that the potential flood of cash will boost the faltering U.S. economy.
Complex Issues
“There are many issues that are very important but are complex and don’t seem of great importance to the wider public - - those are the issues primed for having people who formerly worked on the Hill or executive branch intervening in making policy,” Thurber said.
Those with Capitol Hill connections who are lobbying for the repatriation tax break include former Louisiana Representative Jim McCrery, who until 2009 was the top Republican on the U.S. House’s tax-writing Ways and Means Committee; Dena Battle, the former legislative director for that committee’s current chairman, Representative Dave Camp, a Michigan Republican; and at least four former staffers for House Speaker John Boehner.
Michael Steel, a spokesman for Boehner, an Ohio Republican, said former staff members don’t influence policy. “The speaker makes such decisions based on what is best for his constituents and the American people,” Steel said.
‘Regenerate the Economy’
Advocates for the break say a repatriation holiday would bring more than $1 trillion to the U.S. now held overseas.
“It would do much to regenerate the economy,” said Robert Livingston, a former Republican chairman of the House Appropriations Committee and speaker-designate who is now lobbying for Oracle Corp. (ORCL) “A total of $1.5 trillion from all affected U.S. companies would go a long way to pull us out of the doldrums.”
There are more insiders pushing for the tax holiday than those in Bloomberg News’ tally of at least 60. That figure includes only registered lobbyists who worked for a sitting member of Congress and disclosed lobbying on the issue for the WIN America Campaign, the group ofcompanies seeking the break, or for one of the companies or associations in the coalition.
WIN America is coordinated by SKDKnickerbocker, a Washington political consulting and public relations firm, which includes as a managing director Anita Dunn, former communications director for President Barack Obama. Dunn isn’t a registered lobbyist.
Longtime Fixtures
The list of more than 160 lobbyists includes other longtime fixtures in Washington, such as former Representative Livingston; Democratic fundraiser Tony Podesta; and Kenneth Kies, former chief of staff of the congressional Joint Committee on Taxation.
The proposed break has gained momentum in recent months, with several prominent Democrats, including Senator Charles Schumer of New York, expressing a willingness to consider the tax holiday. Meanwhile, Republican presidential candidates Michele Bachmann, a House member from Minnesota, and Texas Governor Rick Perry have called on Congress to let companies bring home offshore earnings at a reduced tax rate.
The Obama administration has said it is opposed to a stand- alone tax holiday for repatriated profits, pointing to the 2004 experience. Obama has been taking aim at tax breaks benefiting certain industries, such as oil and gas, and deductions and exclusions claimed by millionaires. He has embraced changes suggested by billionaire Warren Buffett, who has said he pays taxes at a lower rate than his secretary.
U.S. multinational companies have amassed more than $1.375 trillion in profits overseas on which they have paid no federal income tax, according to a recent report by JPMorgan Chase & Co. (JPM) When the earnings are returned to the U.S. -- or repatriated -- they are taxed at the top corporate rate of 35 percent, with credits for foreign income taxes paid.
Reprising 2004 Holiday
The companies are pushing to reprise the 2004 holiday that allowed them to bring home offshore earnings at a low tax rate of 5.25 percent. Under that break, companies repatriated to the U.S. $312 billion, largely for stock repurchases rather than direct hiring or investment, according to a recent paper in the Journal of Finance, the latest in a series of studies that reached similar conclusions.
The proposed holiday would reward the companies that have most aggressively parked profits in tax havens such as Bermuda, the Cayman Islands and Switzerland, said Martin A. Sullivan, a former Treasury Department economist and contributing editor for the non-partisan Tax Notes.
“A lot of what companies report as foreign profit is really U.S. profit that should be subject to U.S. tax,” Sullivan said. “Those earnings didn’t get overseas by accident. Many of these companies intentionally put them there to avoid paying U.S. taxes.”
Tally of Lobbyists
Bloomberg’s tally covers individuals who were registered to lobby on the repatriation issue at some point in the first half of this year, the period for which records are available. Some of the lobbyists have since left their firms. The figures don’t include those who were listed as lobbying on general tax issues for companies in the WIN America coalition, except where the lobbyists confirmed to Bloomberg News that they were working on repatriation.
Newer members of the revolving-door community are involved, such as Danielle Maurer, a lobbyist at the Republican firm of Fierce, Isakowitz & Blalock. It has been paid $160,000 so far this year by Oracle to lobby on a variety of tax issues, and the Win America coalition recently hired the firm. Maurer had been director of member services for Boehner, helping assign House members to committees.
Baucus Alumni
In all, three former staffers of Baucus, the Finance Committee’s chairman since 2007, are lobbying on the repatriation holiday. Besides Forbes, there’s Nick Giordano of Washington Council Ernst & Young, a longtime Cisco lobbyist. Microsoft has retained Timothy E. Punke, a former adviser to Baucus on trade issues who is active in Democratic politics.
The WIN America campaign’s manager is Karen Olick, former chief of staff to Senator Barbara Boxer, a California Democrat. One of the spokesmen for the group is Doug Thornell, who most recently was a staffer for Representative Chris Van Hollen, a Maryland Democrat who is a member of the House leadership. Like Anita Dunn, Thornell and Olick aren’t registered lobbyists.
“Our economy needs all the help it can get, and leaving this money in foreign banks when we could bring it home now makes no sense,” Thornell said.
The 2004 tax holiday under the second Bush added no new tax money to the IRS. The economy didn't benefit because none of the thousands of jobs promised by the multinationals that got the tax break were created.
ReplyDeleteMore than 90% of the funds repatriated were used to pay cash dividends to stockholders and for stock buybacks. Wealthy stockholders got a tax break on cash dividends paid by multinationals. Stock buyback programs were used to increase the price of stocks so that CEO could earn seven figure bonuses based on the appreciation of their company's stock value.
Who paid for these goodies for the rich and multinationals? Middle class USA citizens. That's what happens when republicans, specially the new breed of tea party irrationals, run their country.