Michigan U.S. Senator Carl Levin is facing criticism after leading a report released by Senate Permanent Subcommittee on Investigations, which found that nearly $350 billion brought into the U.S. during a 2004 tax break on foreign profits failed to result in additional economic growth.
“There is no evidence that the previous repatriation tax giveaway put Americans to work, and substantial evidence that it instead grew executive paychecks, propped up stock prices, and drew more money and jobs offshore,” Mr. Levin, a Michigan Democrat, said in a statement. “Those who want a new corporate tax break claim it will help rebuild our economy, but the facts are lined up against them.”
The report found that overall, firms that took advantage of the America Jobs Creation Act to repatriate overseas income from 2004 to 2006 actually cut jobs and research and development spending, while raising stock buybacks and executive pay.
Only two of 19 companies surveyed, Microsoft Corp. and Oracle, specifically cited repatriated funds as a contributing factor in the growth of their U.S. work forces after the tax break, the report noted.
“That is an Orwellian way to show how repatriation increases jobs: to say you take repatriated money, you buy another company, you eliminate half the jobs in that company, but the jobs that you didn’t eliminate, you then say added to your own employment rolls,” Mr. Levin said Tuesday.
Ken Glueck, a senior vice president of Oracle, a company singled out by Mr. Levin, blasted the report in a statement.
“The only news in Sen. Levin’s results-oriented ‘study’ is that he still opposes repatriation,” Mr. Glueck said. “With unemployment over 9 percent and more than $1 trillion waiting to be put to work in the United States, one would have thought he would revisit his long-standing opposition.”
The report’s release comes as Congress is considering a similar tax break on profits accrued by companies outside of the U.S. House Republicans, many of whom support the proposal, say the tax break would allow companies to allocate additional assets to the U.S., possibly resulting in the creation of thousands of new jobs.
