Short Attention Span Theater presents: Repatriation Tax Holiday 2By
Two views here on the repatriation holiday. (Sorry about the ad in the first clip.) I had a brief conversation on this Saturday night as Sen. Kay Hagan (D-NC) was speaking at the Grove Park Inn. Hagan is a the primary sponsor of another repatriation tax holiday. (Because it worked so well when the first one passed under Dubya.) Like she said, we’re all about jobs, jobs, jobs.
Hagan, two Democrats and six Republican senators think they can coax the public into having another run at the jobs football that got yanked away after Bush teed it up in 2004. And within weeks of getting their money, Pfizer, HP and others thanked us by laying off thousands of workers to boost their stock prices. As I wrote in back in August,
Phillip L. Swagel, a former chief of staff on President Bush’s Council of Economic Advisers, opposed that bill. He acknowledged the raw infusion of cash might have some sort of stimulative effect. But, Swagel observed, “[Y]ou might as well have taken a helicopter over 90210 [Beverly Hills] and pushed the money out the door. That would have stimulated the economy as well.”
In the second clip, Chuck Marr, Director of Federal Tax Policy at the Center on Budget and Policy Priorities, describes the pitfall of this approach:
And the problem with the logic of this is that, if you do this what you’ve just done is an invitation for companies in the future to ship more and more investments and profits overseas. Because think about what’s happened. They’ve made profits overseas, they hold them until a recession and they get this bargain basement tax rate. Whereas if they invest in Michigan, they pay thirty-five percent. If they invest overseas, they come back and they wait a few years and they pay five percent … a dog could figure this out.
Hiring incentives and penalties aside, I fail to see how the Hagan-McCain bill is a win for anybody but investors, or how any amount of tax incentive will compel companies to hire full-time workers here in the absence of demand for the firm’s products and services because, as you’ve noticed, a lot of people are out of work. I’m sure someone here can show me the error of my ways.