by Joan Entmacher, Vice President for Family Economic Security
National Women’s Law Center
The Senate has started debating the economic recovery plan, and it could do a lot to create and preserve jobs for women and men, help families through tough times, and invest in our nation’s human capital and physical infrastructure. But despite the dire need, the outcome in the Senate is uncertain. Not a single House Republican voted for the package – and there’s a risk that measures important to women and families could get dropped or scaled back to make room for corporate tax breaks that will do little to create jobs.
While modest investments in Head Start are questioned, multinational corporations are mounting a “lobbying blitz” to get billions of dollars in additional tax breaks into the package. Their goal is to get Congress to declare another “dividend repatriation” tax holiday. This would allow corporations that shifted their profits overseas to bring them back at a super-low tax rate: 5.25% instead of the usual 35% rate on corporate profits.
As Citizens for Tax Justice observes, this would reward corporations that moved their profits to offshore tax havens and create an incentive for them to do it again. But – even so – would it create jobs? If corporations knew that they had a one-time-only opportunity to bring funds back to the United States at a low tax rate, would they bring back the money and invest it in creating jobs at home?
That’s what Congress hoped when it declared the first tax holiday for multinationals in 2004 as part of the American Jobs Creation Act of 2004. But, even though Congress put restrictions on the use of the repatriated funds, several analyses of the impact of that tax break, summarized in a recent paper by the Center on Budget and Policy Priorities, found that it “did little more than give windfall profits to a small number of large multinational corporations and did not lead to increased investment and jobs in the United States.” Indeed, several corporations that received billions of dollars cut thousands of jobs the following year.
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