boutons_
06-24-2008, 07:50 AM
http://graphics8.nytimes.com/images/misc/logoprinter.gif (http://www.nytimes.com/)
http://graphics8.nytimes.com/ads/spacer.gifhttp://graphics8.nytimes.com/ads/fox/printerfriendly.gifhttp://graphics8.nytimes.com/ads/fox/2008/biggie_88x31_8k.gif (http://www.nytimes.com/adx/bin/adx_click.html?type=goto&page=www.nytimes.com/printer-friendly&pos=Position1&sn2=336c557e/4f3dd5d2&sn1=497e6934/364a7f85&camp=foxsearch2008_emailtools_810904d-nyt5&ad=biggie_88x31_8k.gif&goto=http://my.foxsearchlight.com/profile/WayneBarrow)
June 24, 2008
A One-Time Tax Break Saved 843 U.S. Corporations $265 Billion
By LYNNLEY BROWNING (http://query.nytimes.com/search/query?ppds=bylL&v1=LYNNLEY%20BROWNING&fdq=19960101&td=sysdate&sort=newest&ac=LYNNLEY%20BROWNING&inline=nyt-per)
More than 840 of the largest American corporations reaped a $265 billion windfall thanks to a one-time tax break aimed at bringing home profits stashed overseas, according to recent government data.
The windfall resulted from a temporary tax deduction for big corporations, which were keeping billions of dollars in profits in overseas subsidiaries and out of the hands of the Internal Revenue Service (http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org).
( so to reward the corps for tax avoidance unavailable to citizen taxpayers, the Repugs handed the corps a $265B "penalty" for being such trustworthy, bona fide, patriotic, lapel-pin citizens )
In recent years, the biggest and wealthiest companies in the United States have increasingly set up foreign subsidiaries and used them either as foreign operations or offshore repositories.
The subsidiaries, many in offshore tax havens like the Netherlands, Ireland and the Cayman Islands, collectively held about $804 billion in foreign profits on which their American corporate parents had yet to pay any United States taxes, according to the I.R.S.
A one-time tax holiday enacted by Congress in 2004 offered companies the chance to bring that money back at a reduced tax rate of 5.25 percent.
( instead of 35% )
Some of the biggest names in corporate America decided to take advantage, in particular those in the pharmaceutical and technology industries. Pfizer (http://topics.nytimes.com/top/news/business/companies/pfizer_inc/index.html?inline=nyt-org) brought back $37 billion, while Hewlett-Packard (http://topics.nytimes.com/top/news/business/companies/hewlett_packard_corporation/index.html?inline=nyt-org) repatriated $14.5 billion.
In all, 843 corporations took advantage of the offer, according to recent I.R.S. statistics of income data, bringing back $362 billion in foreign profits, paid to the parent corporations as dividends. Of that amount, $312 billion qualified for the tax break, giving those companies total tax deductions of $265 billion claimed from 2004 through 2006.
Put another way, the tax break gave each company claiming it an average $370 million in tax deductions.
Supporters of the tax break say it was a success because it brought about $18 billion into Treasury coffers that otherwise would have stayed overseas. The nonpartisan Joint Committee on Taxation, a Congressional agency, had estimated that the tax break would bring in only $2.8 billion, a sixth the actual amount.
“The provision was generally successful in prompting the repatriation of vast sums of foreign profits,” wrote Joseph Calianno, a tax partner at Grant Thornton, in a recent analysis of the data.
But the tax break would not produce income for the I.R.S. in later years in part because of associated foreign tax credit provisions set to kick in later, and in part because of the need to replenish capital in foreign subsidiaries.
Edward D. Kleinbard, chief of staff of the committee and a tax authority, said that the government had privately estimated that companies would bring back only $200 billion, or a third less than the $312 billion that qualified.
Private-sector estimates from Wall Street investment banks, including Bank of America (http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org) and JPMorgan Chase (http://topics.nytimes.com/top/news/business/companies/morgan_j_p_chase_and_company/index.html?inline=nyt-org), were closer to the mark.
The tax break was included in a larger piece of legislation called the American Jobs Creation Act of 2004, with the intention that the repatriated money would prompt investment in the United States economy and spur job growth. Companies had to promise to use the money to invest in their domestic operations. They could not use it to pay dividends, or compensate executives.
( "American Jobs Creation Act of 2004" worked out great as smokescreen name for the "American Corps and Repugs enrich themselves while earners get fucked Act of 2004" )
But the provision had wide definitions of the term investment and allowed corporations to use repatriated profits to shore up their domestic finances, pay legal bills and even bankroll advertising.
Critics of the legislation say there is little convincing evidence that companies put the money into creating jobs or investing in United States operations and deride the tax break as corporate welfare.
“It basically worked out to be one big giveaway,” said Robert Willens, a tax and accounting authority in New York. “The law never took into account the fact that money is fungible.”
Mr. Willens said while companies did make investments in their domestic operations, the repatriated money also freed up a corresponding amount of cash to pay out to shareholders or buy back stock — moves that do not generate job growth or investments. “We know that a lot of stock was retired during this time,” he said.
A 2007 academic study by Roy Clemons, then a graduate student at Texas A&M University (http://topics.nytimes.com/top/reference/timestopics/organizations/t/texas_a_and_m_university/index.html?inline=nyt-org), that was based on earlier data, found that the tax break did not stimulate investment in the United States economy and that repatriated money was often used for disallowed purposes, like stock repurchases.
According to I.R.S. data and Grant Thornton, pharmaceutical manufacturers alone accounted for more than 30 percent of the repatriated total, with 29 corporations each claiming an average tax deduction of almost $3 billion on foreign profits brought home.
Some 9,700 United States corporations had foreign subsidiaries in 2004, the latest year for which data is available. While only 843 corporations took advantage of the tax break, those companies are the biggest and wealthiest in America, Mr. Willens said.
Martin A. Sullivan, an economist and former member of the Joint Committee on Taxation, said, “just use common sense.”
“If I’m going to give you $100 to buy lunch,” he said “but you spend $500 a year anyway on lunch, you then bring receipts showing you bought $100 in lunch — it’s a ridiculous fig leaf.”
http://graphics8.nytimes.com/images/2008/06/24/business/0624-biz-webTAX.jpg
http://www.nytimes.com/2008/06/24/business/24tax.html
================
$265B in due taxes left uncollected.
You're doing a heckuva job, dubya
http://graphics8.nytimes.com/ads/spacer.gifhttp://graphics8.nytimes.com/ads/fox/printerfriendly.gifhttp://graphics8.nytimes.com/ads/fox/2008/biggie_88x31_8k.gif (http://www.nytimes.com/adx/bin/adx_click.html?type=goto&page=www.nytimes.com/printer-friendly&pos=Position1&sn2=336c557e/4f3dd5d2&sn1=497e6934/364a7f85&camp=foxsearch2008_emailtools_810904d-nyt5&ad=biggie_88x31_8k.gif&goto=http://my.foxsearchlight.com/profile/WayneBarrow)
June 24, 2008
A One-Time Tax Break Saved 843 U.S. Corporations $265 Billion
By LYNNLEY BROWNING (http://query.nytimes.com/search/query?ppds=bylL&v1=LYNNLEY%20BROWNING&fdq=19960101&td=sysdate&sort=newest&ac=LYNNLEY%20BROWNING&inline=nyt-per)
More than 840 of the largest American corporations reaped a $265 billion windfall thanks to a one-time tax break aimed at bringing home profits stashed overseas, according to recent government data.
The windfall resulted from a temporary tax deduction for big corporations, which were keeping billions of dollars in profits in overseas subsidiaries and out of the hands of the Internal Revenue Service (http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org).
( so to reward the corps for tax avoidance unavailable to citizen taxpayers, the Repugs handed the corps a $265B "penalty" for being such trustworthy, bona fide, patriotic, lapel-pin citizens )
In recent years, the biggest and wealthiest companies in the United States have increasingly set up foreign subsidiaries and used them either as foreign operations or offshore repositories.
The subsidiaries, many in offshore tax havens like the Netherlands, Ireland and the Cayman Islands, collectively held about $804 billion in foreign profits on which their American corporate parents had yet to pay any United States taxes, according to the I.R.S.
A one-time tax holiday enacted by Congress in 2004 offered companies the chance to bring that money back at a reduced tax rate of 5.25 percent.
( instead of 35% )
Some of the biggest names in corporate America decided to take advantage, in particular those in the pharmaceutical and technology industries. Pfizer (http://topics.nytimes.com/top/news/business/companies/pfizer_inc/index.html?inline=nyt-org) brought back $37 billion, while Hewlett-Packard (http://topics.nytimes.com/top/news/business/companies/hewlett_packard_corporation/index.html?inline=nyt-org) repatriated $14.5 billion.
In all, 843 corporations took advantage of the offer, according to recent I.R.S. statistics of income data, bringing back $362 billion in foreign profits, paid to the parent corporations as dividends. Of that amount, $312 billion qualified for the tax break, giving those companies total tax deductions of $265 billion claimed from 2004 through 2006.
Put another way, the tax break gave each company claiming it an average $370 million in tax deductions.
Supporters of the tax break say it was a success because it brought about $18 billion into Treasury coffers that otherwise would have stayed overseas. The nonpartisan Joint Committee on Taxation, a Congressional agency, had estimated that the tax break would bring in only $2.8 billion, a sixth the actual amount.
“The provision was generally successful in prompting the repatriation of vast sums of foreign profits,” wrote Joseph Calianno, a tax partner at Grant Thornton, in a recent analysis of the data.
But the tax break would not produce income for the I.R.S. in later years in part because of associated foreign tax credit provisions set to kick in later, and in part because of the need to replenish capital in foreign subsidiaries.
Edward D. Kleinbard, chief of staff of the committee and a tax authority, said that the government had privately estimated that companies would bring back only $200 billion, or a third less than the $312 billion that qualified.
Private-sector estimates from Wall Street investment banks, including Bank of America (http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org) and JPMorgan Chase (http://topics.nytimes.com/top/news/business/companies/morgan_j_p_chase_and_company/index.html?inline=nyt-org), were closer to the mark.
The tax break was included in a larger piece of legislation called the American Jobs Creation Act of 2004, with the intention that the repatriated money would prompt investment in the United States economy and spur job growth. Companies had to promise to use the money to invest in their domestic operations. They could not use it to pay dividends, or compensate executives.
( "American Jobs Creation Act of 2004" worked out great as smokescreen name for the "American Corps and Repugs enrich themselves while earners get fucked Act of 2004" )
But the provision had wide definitions of the term investment and allowed corporations to use repatriated profits to shore up their domestic finances, pay legal bills and even bankroll advertising.
Critics of the legislation say there is little convincing evidence that companies put the money into creating jobs or investing in United States operations and deride the tax break as corporate welfare.
“It basically worked out to be one big giveaway,” said Robert Willens, a tax and accounting authority in New York. “The law never took into account the fact that money is fungible.”
Mr. Willens said while companies did make investments in their domestic operations, the repatriated money also freed up a corresponding amount of cash to pay out to shareholders or buy back stock — moves that do not generate job growth or investments. “We know that a lot of stock was retired during this time,” he said.
A 2007 academic study by Roy Clemons, then a graduate student at Texas A&M University (http://topics.nytimes.com/top/reference/timestopics/organizations/t/texas_a_and_m_university/index.html?inline=nyt-org), that was based on earlier data, found that the tax break did not stimulate investment in the United States economy and that repatriated money was often used for disallowed purposes, like stock repurchases.
According to I.R.S. data and Grant Thornton, pharmaceutical manufacturers alone accounted for more than 30 percent of the repatriated total, with 29 corporations each claiming an average tax deduction of almost $3 billion on foreign profits brought home.
Some 9,700 United States corporations had foreign subsidiaries in 2004, the latest year for which data is available. While only 843 corporations took advantage of the tax break, those companies are the biggest and wealthiest in America, Mr. Willens said.
Martin A. Sullivan, an economist and former member of the Joint Committee on Taxation, said, “just use common sense.”
“If I’m going to give you $100 to buy lunch,” he said “but you spend $500 a year anyway on lunch, you then bring receipts showing you bought $100 in lunch — it’s a ridiculous fig leaf.”
http://graphics8.nytimes.com/images/2008/06/24/business/0624-biz-webTAX.jpg
http://www.nytimes.com/2008/06/24/business/24tax.html
================
$265B in due taxes left uncollected.
You're doing a heckuva job, dubya