* Left-leaning group hits push for another tax holiday
* Report singles out 10 companies for cutting jobs
WASHINGTON Oct 4 Ten major U.S. corporations,
including big banks Citigroup Inc (C.N) and Bank of America
Corp (BAC.N), laid off workers after enjoying a tax holiday in
2004-2005 that had been billed as a form of economic stimulus,
said a report released on Tuesday.
With large multinational companies today pressing Congress
for another tax holiday, the Institute for Policy Studies
reported that the last one did not fulfill its rosy promises
for hundreds of thousands of U.S. workers.
Fifty-eight corporations that accounted for 70 percent of
overseas profits repatriated under the 2004-2005 tax break
collectively saved $64 billion in taxes, then cut 600,000 jobs
through layoffs, the report said.
It is the latest in a series of warring studies on whether
U.S. multinationals should be allowed, for the second time, to
bring home hundreds of billions of dollars in overseas profits
at a bargain-basement tax rate.
Large companies are lobbying again for such a tax break,
which would let them repatriate much if not all of an estimated
$1.5 trillion in overseas profits for well below the full
35-percent corporate income tax rate.
Legislation in the Republican-controlled U.S. House of
Representatives would let them repatriate those profits at 5.25
percent, the same tax rate given to them under a similar tax
holiday during the Bush administration.
Just as they are doing now, companies six years ago said
that the repatriation tax break would boost jobs and the
economy. But the institute said this did not happen, as earlier
academic studies have also found.
"History shows that many 'tax holiday' companies use
repatriated profits to reward executives and other
shareholders, then lay off workers. Corporate tax holidays have
resulted in precious few U.S. jobs," said Chuck Collins,
co-author of the report from the left-leaning institute.
Besides Citi and Bank of America, the report focuses on
technology group Hewlett-Packard (HPQ.N), drugmakers Pfizer Inc
(PFE.N) and Merck & Co Inc (MRK.N), and manufacturers Ford
Motor Co (F.N) and Caterpillar Inc (CAT.N).
Telecom giant Verizon Communications Inc (VZ.N) and
chemical makers Dow Chemical Co (DOW.N), and DuPont (DD.N) are
also singled out as corporations that "benefited the most
financially from the tax holiday and slashed the most jobs."
The U.S. Senate Permanent Subcommittee on Investigations is
looking into the results of the 2004-2005 tax holiday as well.
A report from the panel is expected within a few weeks, its
chairman, Democrat Carl Levin, told Reuters last month.
In 2004-2005, 843 corporations brought home $362 billion in
overseas income at a 5.25-percent tax rate. Analysts said that
experience encouraged companies to park more income overseas,
allowing them to postpone indefinitely paying any U.S. income
tax on it, as long as the money stays abroad.
With the economy struggling and new government stimulus
hard to come by, a well-financed corporate lobbying campaign --
organized under the WIN America coalition -- is arguing that
another tax holiday would boost the economy.
As reported by Reuters in August, the coalition has hired
dozens of former congressional tax-writing committee staffers.
The New Democrat Network, a centrist group, issued a report
in August saying an overseas tax repatriation holiday would
bring new net revenue into the U.S. Treasury.
At a time of soaring government deficits, the Joint
Committee on Taxation, a nonpartisan congressional research
arm, has estimated that a tax holiday, like the one proposed in
the House and favored by WIN America, would eventually cost
taxpayers about $78.7 billion over the next decade.
(Reporting by Kevin Drawbaugh, editing by Bernard Orr)