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The U.S. Chamber’s Tax Repatriation Holiday: Boon for CEOs, Bust for American Workers
As working families file their taxes today, many major U.S. corporations will effectively not. Through a series of tax loopholes – which the U.S. Chamber has lobbied on behalf of – major U.S. corporations like General Electric and ExxonMobil have an effective tax rate of zero. Remarkably, instead of eliminating the tax loopholes that have contributed to our national debt, the U.S. Chamber is promoting a scheme that would enrich shareholders and executives with a tax repatriation holiday.
Currently, many U.S. based multinational corporations create foreign subsidiaries to avoid paying U.S. corporate taxes. Instead of advocating for a policy that would strip U.S. corporations of these tax loopholes, the U.S. Chamber is calling for a "tax holiday," which would allow multinational firms with foreign subsidiaries to repatriate earnings at much lower tax rates than the current corporate rate. In 2004, the Bush administration implemented a tax repatriation holiday that failed to accomplish the purported objectives. The facts show that far from creating jobs, tax repatriation merely allowed an outlet for Chamber member companies to offshore U.S. jobs and reap personal windfalls for their CEOs.
In a new report, U.S. Chamber Watch explains how this policy not only shortchanges American taxpayers but enriches the executives of the companies that repatriate. In particular:
- Despite claims by the U.S. Chamber to the contrary, the tax repatriation holiday in 2004 did not create jobs in the United States. Instead, it created an estimated windfall of well over $250 million for the CEOs of U.S. Chamber companies who benefitted from stock buybacks after the repatriation.
- Of the top 105 companies that repatriated earnings, 22 have direct ties to the U.S. Chamber or its affiliates. These companies repatriated over $133 billion in earnings.
- Not only did repatriating companies not create jobs, some even cut jobs in the United States. Five of the U.S. Chamber-affiliated companies for whom jobs data is available repatriated over $16 billion in foreign earnings but cut over 70,000 American jobs.
- Research shows that 92% of overseas earnings repatriated by companies went to shareholders, mostly through stock buybacks. Such buybacks – which Warren Buffett called “foolish” – typically benefit only those shareholders able to capitalize on short-term impacts, often at the expense of investors interested in long-term growth and investment that leads to job creation.
- Since executive compensation is often either linked to measures inflated by buybacks or comes in the form of stock options, these stock buy backs have been have been called “backdoor compensation” for corporate executives.
- Many CEOs of U.S. Chamber companies who repatriated earnings and conducted stock buy backs executed stock options, thereby increasing their net worth.
To learn more about the U.S. Chamber's push to line the pockets of corporate CEO's at the taxpayers expense, read the full report, here [Updated as of 4/29/11].