The $104 Billion Refund:The most absurd corporate tax giveaway of 2005

By Michelle Leder
Posted Thursday, April 13, 2006, at 12:33 PM ET

Feeling flush because you're getting a nice tax refund this year? You're not alone. Some of America's largest corporations—a virtual who's who of the Fortune 100—have been reporting their own hefty tax windfalls, thanks to an absurd provision of a law designed to create jobs.

IBM, for example, is banking a $2.8 billion refund—well, better to call it a "tax savings"—because instead of paying the normal corporate tax rate of 35 percent on $9.5 billion in profits it earned overseas, the company paid only 5.25 percent. That's the magic of the American Jobs Creation Act, a piece of legislation that passed with comfortable margins in both the House and the Senate and was signed into law by President Bush just two weeks before the 2004 elections.

The AJCA, which was pushed through during the last fit of panic about outsourcing, was ostensibly designed to encourage companies to add jobs here. It gave a small tax deduction to American manufacturers, and it offered a one-time tax holiday in 2005 when corporations could repatriate their foreign income at a massively reduced tax rate. This repatriation, the theory went, would encourage R & D and capital investment in the United States, leading to new positions down the road. But, like President Bush's creatively named Clear Skies initiative and Healthy Forest Restoration Act, the American Jobs Creation Act has not lived up to its title.

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Analysts anticipate that American companies will have repatriated around $350 billion in 2005 as a result of the law. While it's hard to make a straight calculation because of the vagaries of the tax code, that works out to a savings of roughly $104 billion on corporate America's tax bill. At Pfizer, the pharmaceutical giant that announced the single largest repatriation—$37 billion—the one-time windfall works out to approximately $11 billion. That kind of tax savings buys a lot of $600-an-hour lobbyists, though not, apparently, many scientists and salespeople. In its annual report, Pfizer doesn't list employees by region. But the company's total head count dropped to 106,000 at the end of 2005, about 8 percent fewer jobs than at the end of 2004.

http://www.slate.com/id/2139782/

There should be hearings in congress on this!!!

you mean the REPUBLICAN controlled Congress. :eyes: Good luck with that. Oh, I can't wait until January of 2007 when the people of this country can FINALLY find out the breadth and depth of the Republican corruption. Most people are not going to believe how much corruption one party can savage on a nation when the obstructionist Republicans are the minority party in Congress. I can't wait!