THE PLANK JANUARY 29, 2009
It's received little discussion so far, but part of the stimulus plan would reduce taxes on corporate overseas earnings "repatriated" to the United States, from 35 percent to 5.25 percent. Supporters, including Senators Barbara Boxer and John Ensign, say such a dramatic reduction could bring tens of billions back home, boosting jobs and expanding tax coffers.
The problem is, at least in terms of jobs, that we've already tried this--and it doesn't work. In 2004 Congress passed the ""Jobs Creation Act," which reduced taxes on overseas earnings for 2005. The result? Though the one-year break brought over $500 billion back home, according to BusinessWeek,
One thing is clear, however: The money piling in from abroad as the
result of the Jobs Creation Act has done little to actually spur
hiring. In fact, six of the 10 companies repatriating the biggest
totals are axing workers in the U.S. They include HP, which announced
July 19 that it would cut its head count by 14,500 in the U.S. and
abroad, and Pfizer, which has said it will shutter 20 factories with
undisclosed U.S. job losses to lower costs by $4 billion by 2008.
But, hey, second time's a charm, right? (h/t to Lee Drutman.)