Senate Panel Says 2004 Corporate Tax Break Law Proved Futile

October 12 00:00 2011

New York, October 12 ( – A Senate panel on Tuesday found that the huge tax breaks given to US corporations through a 2004 law to bring profits back home proved futile because it failed to create jobs. The study released by the Senate undercut new proposals for a similar initiative to boost the stagnant economy.

The report found that U.S. corporations that gained from the America Jobs Creation Act to repatriate overseas income from 2004 to 2006 simply raised stock buybacks, increased executive pay, cut jobs, and reduced research and development spending instead of adding jobs as was the intention of the law. The law specifically prohibited stock buybacks and executive compensation.

Sen. Carl Levin, D-Mich., who chairs the Senate Permanent Subcommittee on Investigations, said that “there is no evidence that the previous repatriation tax giveaway put Americans to work.” The report by the panel’s Democratic majority observed that some companies moved their operations overseas to get the tax break and this action caused job losses. There was a net loss of $3.3 billion in tax revenue over 10 years due to the above action.

Top corporations, business trade groups and many Republicans are lobbying for a tax break for multinationals that repatriate foreign earnings, arguing that as much as $1 trillion can be pumped into the economy and several million jobs can be created.