Hey, remember way, way back — say about a month ago — when Congress and the White House were saying that America’s No. 1 most super-important issue was deficit reduction? You can forget about that now, because Congress seems ready to give a big tax break to multinational corporations, which will, of course, increase the deficit.
Did you get a big tax break this year? I didn’t think so. Maybe you should call U.S. Sen. Kay Hagan (D-NC) and let her know about the oversight. Hagan, you see, co-sponsored, with Sen. John McCain (R-AZ), the Foreign Earnings Reinvestment Act. That bill would create a “tax holiday” for corporations who’ve been sheltering some of their profits overseas. It would allow them to bring “foreign-held earnings” back into the U.S. at a vastly reduced tax rate — as low as 5.25 percent, compared to the usual rate of 35 percent.
The reason? Do you have to ask? Why, a tax holiday will allow those corporations to “revitalize the American economy” by — can you guess? — using that money to create jobs! Of course it would. Who doesn’t know that corporations are just waiting for a big tax break to start hiring people again? As a New York Times editorial put it this morning, “Big business has clearly decided that the economic crisis is too important to waste.”
The editorial goes on to point out that the last such tax holiday, in 2004, resulted in the money being spent on dividends and stock buybacks, which was great for execs and shareholders but didn’t do squat for creating jobs. Anyone who honestly thinks it would be different this time should probably go ahead and buy that unicorn they've been looking at.
Here’s an alternate idea: charge those companies the 35-percent tax now, on the money they’ve earned overseas, and tell them that if they want to continue enjoying the benefits of the United States, they need to move half their foreign earnings back to the U.S. every year, to be taxed at normal rates, or else take a long hike back to China.