It's not that kind of holiday
In our country, right now, 24 million people can’t find a full-time job, 50 million people in this country who can’t see a doctor when they’re sick, 47 million people need government help feed themselves, and 15 million families who owe more on their mortgage than the value of their home. Clearly, our economy needs some serious help.
One would think that our elected representatives would be clamoring over ways to aid their constituents facing foreclosure or those long-term unemployed who just can’t seem to catch a break, many of whom are occupying a city center in angry protest--if not out human decency, at least for political points. But instead, our junior Senator is currently focused on giving billions of tax breaks to corporations. That’s right – tax breaks to corporations!
I swear, I’m not making this up. Here’s a quote from the opening paragraph from Senator Hagan’s press release on her proposed legislation:First, let me quote you the opening paragraph from Senator Hagan’s press release:
U.S. Senators Kay R. Hagan (D-NC) and John McCain (R-AZ) today introduced the bipartisan Foreign Earnings Reinvestment Act to help reinvigorate the American economy. The bill would trigger the flow of a trillion dollars back into the American economy by temporarily allowing companies to return profits earned overseas to the U.S. at a temporarily reduced tax rate.
That may sounds reasonable, if not politically tone-deaf, and might almost be a worth a shot if we didn’t already try the idea eight years ago, with horrible results. The Homeland Investment Act provided for a one-time tax holiday on the repatriation of foreign earnings by U.S.-based multinational companies. When it was passed in 2004 as part of the American Jobs Creation Act, Members of Congress argued that it would create more than 500,000 jobs over 2 years by raising investment in the United States. This, however, is what actually happened, courtesy of a report on the subject issues by the Harvard Business School:
Repatriations did not lead to an increase in domestic investment, domestic employment or R&D—even for the firms that appeared to be financially constrained or lobbied for the holiday. Instead, estimates indicate that a $1 increase in repatriations was associated with a $0.60-$0.92 increase in payouts to shareholders—despite regulations stating that such expenditures were not a permitted use of repatriations qualifying for the tax holiday. The results indicate that U.S. multinationals were not financially constrained and were reasonably well-governed. The fungibility of money appears to have undermined the effectiveness of the regulations.
Call us crazy, but when Harvard, not to mention the Congressional Research Service, say the same economic policy failed to work last time, why would you try to implement it again? According to Congress’s Joint Committee on Taxation, another tax holiday at would increase the deficit by between $42 and $80 billion over 10 years, depending on the percentage of the rate cut, an absurd sum to simply give away in a time of such drastic austerity and budget-cutting. How about we invest that money in a jobs program that would actually create jobs?
Perhaps Senator Hagan is confusing people, the conventional kind, with corporations. It’s easy to do these days if you read Supreme Court opinions on campaign finance. Corporations are people, too, through that tortured logic.
As the New York Times concluded on Sunday, “A corporate tax holiday won’t create more jobs. What it will do is raise the deficit.” Please, Senator Hagan, let’s start addressing the real needs of people in North Carolina – the flesh and blood kind.
You know… the kind that vote.