Corporations seek tax break to bring profits home
By David Kocieniewski
June 20, 2011
NEW YORK — Some of the nation’s largest corporations have amassed vast profits outside the country and are pressing Congress and the Obama administration for a tax break to bring the money home.
Apple has $12 billion waiting offshore, Google has $17 billion, and Microsoft is holding $29 billion.
Under a proposed repatriation holiday, the federal income tax owed would fall to 5.25 percent for one year, from 35 percent. Short term, the measure could generate tens of billions in tax revenue.
Corporations and their lobbyists say a tax break could inject $1 trillion or more into the economy, and they promoted the proposal as “the next stimulus’’ at a conference Wednesday in Washington.
But that’s not how it worked last time.
Congress and the Bush administration gave companies a similar tax incentive, in 2005, and 800 took advantage. Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to the nonpartisan National Bureau of Economic Research. Its study concluded the program “did not increase domestic investment, employment or research and development.’’
The Obama administration has been uncharacteristically harsh in its criticism of the idea. The president and Treasury Secretary Timothy F. Geithner have said they will support it only if it is part of a corporate tax overhaul that results in no decline in federal revenues.