Business Leaders Say Corporate Tax Holiday No Win For America

Contact: Bob Keener, 617-610-6766, bobkeener@businessforsharedprosperity.org

Washington DC, June 14, 2011 – Congress should reject pleas by U.S. multinational corporations for another tax holiday to “repatriate” profits parked overseas, a coalition of business organizations said in a letter to Congress released today. “This proposed ‘repatriation’ would not be a win for America,” the letter states. It would reward companies for disguising U.S. profits as foreign profits to avoid taxes, cost the U.S. Treasury $80 billion according to the Joint Committee on Taxation, and increase pressure to cut government spending on services and infrastructure that really strengthen our economy.

“There is no excuse for repeating a policy that’s a proven failure,” said Scott Klinger, Tax Policy Director of Business for Shared Prosperity, which organized the letter. “Congress passed a similar tax holiday in 2004 with similar promises of increasing jobs and investment in the United States. Instead, the National Bureau of Economic Research found that a dollar increase in repatriated earnings was associated with an increase of almost a dollar in payouts to shareholders – many CEOs among them. Corporations eliminated more American jobs and shifted even more income and investment to offshore tax havens in the wake of the tax holiday.”

“There’s nothing patriotic about this proposed tax break,” said Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce. “It rewards those businesses that have most aggressively shifted profits and jobs overseas while penalizing those of us who have always invested in America. While Big Business gets billions in tax cuts, we face huge cuts to the Small Business Administration and other programs vital for small businesses, which create most of the new jobs and are most rooted in our communities.”

“Aggressive tax avoidance raises the question of what kind of country we want to have and who is going to pay for it,” said entrepreneur Paul Egerman, founder of the medical information technology company eScription and a member of Business for Shared Prosperity. “It is simply wrong that a U.S. multinational company is able to report profits to their shareholders and losses to Uncle Sam. When Google or Pfizer deploy armies of accountants to game their taxes down, it means the rest of us are left responsible for the bill. Tax policy should not force domestic enterprises to compete on an unlevel playing field against companies that use offshore tax havens to relocate profits and avoid taxes.”

The letter can be read here. Signers include Business for Shared Prosperity, the South Carolina Small Business Chamber of Commerce, Main Street Alliance, American Sustainable Business Council, American Made Alliance, National Latino Farmers and Ranchers Trade Association, Social Venture Network, Green America, California-based Sustainable Business Alliance, Maine Small Business Coalition and other organizations whose memberships include small business owners throughout the United States.

Using tax loopholes, U.S. corporations have shifted more than $1 trillion of profits offshore. As Bloomberg Business Week recently reported, “Google reduced its income taxes by $3.1 billion over three years by shifting income to Ireland, then the Netherlands, and ultimately to Bermuda.” These are the kind of funds the pro-tax holiday WinAmerica coalition of Google, Pfizer, Duke Energy, the U.S. Chamber of Commerce and others describe as “trapped overseas.”

“Imagine if I took my U.S. college degrees and CPA license off my wall, stuck them in a safe deposit box for a shell corporation I created in Bermuda, and told my Oregon clients to send their payments there,” said Brian Setzler, President of TriLibrium an accounting and business advisory firm in Portland, Ore. “Imagine this little accounting trick allowed me to avoid paying U.S. taxes until I brought those ‘foreign’ funds back to the United States – or maybe I’d just go retire in Bermuda. This is just the kind of absurd accounting acrobatics U.S. multinational corporations use to avoid paying billions of dollars annually in U.S. corporate income taxes. They shouldn’t be rewarded with a tax holiday.”

“Passing another tax holiday would be like a shot of steroids for those willing to shift jobs and investment abroad to avoid their tax obligations at home,” said Debra Ruh, CEO and founder of TecAccess in Rockville, VA.

“Tax cuts don’t create jobs. Many of those who benefitted from the last tax holiday laid off thousands of American workers while enriching their shareholders. We can’t afford to make that mistake again,” said John Costin, owner of Veneer Services Unlimited in Kennebunk, and a leader with the Maine Small Business Coalition.

To arrange interviews with business people opposed to the repatriation tax holiday, contact Bob Keener at 617-610-6766 or bobkeener@businessforsharedprosperity.org.

Business for Shared Prosperity is a network of forward-thinking business owners, executives and investors.

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