The coalition calls itself WIN America, but the numbers involved in the corporate tax holiday mean a real loss for America. The Congressional Joint Committee on Taxation has calculated this tax windfall would cost $80 billion, money that would be made up with higher taxes on small business people like me, or through reduced government services and infrastructure upon which all businesses, communities and families depend.
Tax amnesty programs are nothing new. The IRS has a couple of times allowed individual taxpayers to declare hidden offshore assets and pay both the full tax due and penalties in exchange for avoiding prosecution and possible jail time. While much corporate tax-dodging through the use of tax havens is neither hidden, nor illegal under current law favoring U.S. multinationals, it wholly stems from corporations who engage in these transactions for the principle purpose of shifting profits between countries in order to avoid taxes. Creating an incentive for such anti-social behavior through preferential tax rates will only serve to accelerate the offshoring of U.S. profits through fictional transactions.
Indeed, this is exactly what happened in 2004, when Congress enacted the American Jobs Creation Act, a bill which promised that a 5.25% tax rate would bring home billions of dollars that supporters claimed would be reinvested to create American jobs. The promise never materialized; most of the funds went instead to boost shareholder dividends and stock buybacks. Many of the biggest beneficiaries of the tax break, including Pfizer, Honeywell, and Hewlett Packard, laid off thousands of workers just months after receiving their tax windfall. That tax holiday, and the promise of another, has dramatically accelerated the amount of U.S. profits shifted offshore.
All of my education took place in the United States, as do all of my client meetings. The vast majority of Americans find it right and logical that I have a duty to pay taxes in the U.S. It is time that the same logic applies to multinational corporations, and that we stop accepting fairy tales about patents and trademarks held in some far-away bank vault.
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Setzler is President and founder of TriLibrium, a public accounting and business advisory firm located in Portland, OR.
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Copyright (C) 2011 by American Forum. 6/11
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