WP: Break on Foreign-Profit Tax Means Billions to U.S. Firms

[DeepModem Mom]

Break on Foreign-Profit Tax Means Billions to U.S. Firms
By Jonathan Weisman
Washington Post Staff Writer
Friday, August 19, 2005; Page D01


Prompted by a one-time tax holiday on profits earned abroad, pharmaceutical giant Eli Lilly and Co. announced early this year that it would bring home $8 billion to boost research and development spending, capital investments and other job-creating ventures.

Six months into the year, Lilly's R&D spending had increased by 10 percent. But that $134 million is only a small fraction of the $8 billion that is boosting the company's coffers.

For proponents of the tax holiday, including the corporations that lobbied for it, Lilly proves that the tax provision is working. For skeptics, it means the opposite: A measure designed to create jobs is instead rewarding the companies that are most adept at stashing overseas profits in tax havens, allowing them to bring money home at a severely discounted tax rate. Once here, that money is simply freeing up domestic profits that would have been spent on job creation and investment anyway.

"There will be some stimulative effect because it pumps money into the economy," said Phillip L. Swagel, a former chief of staff on President Bush's Council of Economic Advisers, which had opposed the tax holiday. "But you might as well have taken a helicopter over 90210 (Beverly Hills) and pushed the money out the door. That would have stimulated the economy as well."

A well-organized business coalition, led by pharmaceutical firms and high-technology companies, pushed hard last year to get a long-sought tax holiday into the corporate tax bill moving through Congress, called the American Jobs Creation Act. Treasury Secretary John W. Snow objected that the measure would unfairly benefit multinational corporations over domestic firms, while White House economists said it would produce no substantial economic benefit....(W)ith bipartisan backing, the business groups prevailed....


http://www.washingtonpost.com/wp-dyn/content/article/2005/08/18/AR2005081801926.html

[bribri16]

1. But the billions will not be transfered into living wages and benefits for

workers. Just more money in the pockets of the wealthy so that they can buy the US government for the Republicans. That should be enough to get the working poor back to the polls for the Dems.

[MadisonProgressive]

2. Don't we have a couple of wars to pay for first?

[Tempest]

3. This is the biggest reason for the increase in tax revenues

And the stupid rightwingnuts think the increase means the economy is on sound footing.

I can't wait to hear the excuses when the amnesty period is over and tax revenues drop off the cliff.

[finecraft]

4. Ding! Ding! Ding! We have a winner!

Glad someone else sees this as the reason tax revenues are increasing. :hi: