Group Pushes For Corporate Tax Holiday
MELISSA BLOCK, Host:
One proposal to boost the economy comes from a group called Win America. It's pushing the government to allow companies to repatriate hundreds of billions of dollars in cash parked in accounts overseas. Normally, that money would be subject to a tax rate of up to 35 percent, but lobbyists are hoping to strike a deal that would lower the rate, temporarily, to about five percent.
GUY RAZ, Host:
This week, Bloomberg Businessweek magazine published an article that shows how dozens of former congressional aides are part of this effort to help major corporations secure a massive tax break. At the center of the web is a man named Jeffery Forbes. He is the former chief of staff to Montana Senator Max Baucus, who happens to be the head of the Senate Finance Committee, the same committee that helps write tax laws. Jesse Drucker was one of the reporters who connected the dots and he joins me now. Welcome to the program.
JESSE DRUCKER: Thanks for having me.
RAZ: First, how much money are we talking about in accounts parked overseas?
DRUCKER: Well, U.S. companies at least $1.3 trillion sitting overseas that has not been taxed so far in the U.S.
RAZ: And Jesse, these are offshore bank accounts where the money is being held?
DRUCKER: The cash isn't really physically sitting offshore, or it doesn't have to be.
RAZ: And they are obviously trying to get some of that money back. Which companies are we talking about? Who's pushing for it?
DRUCKER: We're talking about Google, we're talking about Cisco, Apple, Pfizer, pretty much every big technology company, every big pharmaceutical company pushes a lot of their profits overseas in order to avoid paying U.S. income taxes. And the way the rules are supposed to work is that when they bring that money back home, they're supposed to pay U.S. federal income taxes minus, you know, taxes they've already paid overseas. But what these companies want to do is they want to bring it back and not pay the federal income tax.
RAZ: The argument they're making to the government is this will be like a mini-stimulus. We'll bring this money back and it'll create jobs.
DRUCKER: Yeah, that's the argument. I mean, you know, the thing about this proposed tax break is that this isn't totally theoretical. In 2004, Congress passed this identical break and companies brought home about $300 billion at a reduced rate of five-and-a-quarter percent. And basically, all the independent research on that break shows that that money was largely used to buy back company shares, something that, you know, increases their stock price. So, it wasn't really used to hire people. It wasn't used to invest in things.
RAZ: Okay. Jesse, tell me about the lobbyists behind this push, because it appears to be pretty bipartisan.
DRUCKER: You have a woman named Danielle Maurer is a lobbyist for Oracle. She is John Boehner's former director of member services. You have Anita Dunn working for Win America. She is technically not a lobbyist, but Anita Dunn is President Obama's former communications director. And so, you know, there's former staffers for Harry Reid, for Orrin Hatch, for Chuck Schumer. Across the board, you have people lobbying for all these companies who either used to be members of Congress or work for Congress in some capacity.
RAZ: How many people are we talking about? How many former congressional aides and members?
DRUCKER: We counted at least 60 former congressional employees working on this and at least 160 lobbyists in all. But because of the way the lobbying disclosure rules work, those numbers are almost certainly too low. The real numbers are almost definitely higher than that.
RAZ: Now, while some people call it influence peddling, we should stress that according to the rules, this is all above board, basically.
DRUCKER: It's very difficult to find someone looking at the evidence of the last tax holiday that this will stimulate the economy. And so, it really shows that if the companies want to get this, they're gonna have to turn to kind of the old tried and true trick of getting former congressional staffers to lobby their old bosses.
RAZ: Couldn't Congress, though, place restrictions on how that repatriated money would be used? In other words, couldn't they say, okay, we'll give you a tax holiday, but you can't use it to buy back stock and you can't use it to fatten executive pay, you've got to use it to create jobs?
DRUCKER: Yeah, you could do that. There were restrictions like that the last time around. And as I said, every study shows that the money went to buy back stock largely anyway.
RAZ: That's Jesse Drucker, an investigative reporter for Bloomberg, talking about a potential tax holiday being pushed by major American corporations. Jesse, thanks.
DRUCKER: Thank you.
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