Time magazine featured an article by Rana Foroohar on Jan. 14 entitled, “The Trillion-Dollar Homecoming,” which discussed transnational companies’ proposal for another “tax holiday.” This “holiday” would allow big business to keep funds stashed in foreign bank accounts at lower tax rates.
The corporate rhetoric is that this will make for higher profits and “create jobs.” However, most workers in the U.S. suffering under a national economy with skyrocketing unemployment would beg to differ. Almost every major corporation continues to cut its workforce no matter the already existing tax breaks. Any “created jobs” don’t begin to replace those already axed.
Aside from no tax provisions or ones that corporations can easily get around, a large amount of extremely low-wage workers are available. This creates high-growth, low-tax profit locations. In addition, corporations also want to bring profits back home for free, and send them right back out, with the expansion of factories overseas.
Foroohar notes that this is exactly what happened in 2004, when Congress granted a tax holiday and companies brought 50 percent of their earnings — collectively $362 billion — back home. The earnings, however, went to investors’ enrichment, through stock buybacks and dividend payments.
As reported in Workers World, a study released in late July by the Tax Justice Network of the U.S. revealed that deposits stored in hidden bank accounts and tax shelters “amounts to the stupendous sum of between 21 and 32 trillion (that’s with a ‘t’) dollars.” (See “Tale of the Golden Hoard” at workers.org)
A report by the Council on Foreign Relations found that many of the major high-tech, pharmaceutical and financial companies have not created jobs in the U.S. since the 1980s. Any that were or could have been created were most likely cheap, outsourced labor positions with decreasing wages or temporary domestic positions, with very few benefits for the workers.
JPMorgan, according to Foroohar, predicts that the proposed tax rate of 5.25 percent would act as another federal stimulus regarding goading stock prices. Additionally, even Warren Buffett and other billionaire and multimillionaire investors believe that the repatriation of foreign earnings with very low or no tax rates would increase the outsourcing of jobs. Kimberly Clausing, an economics professor at Reed College, estimates that implementing the tax breaks would cost 800,000 U.S. jobs.
Those who argue for this system are among companies that already pay the lowest average tax rates globally. It is common practice for these companies to easily dance around provisions that ensure spending is tracked by putting foreign earnings in a separate account named “business development” or something similar, and use preexisting U.S. funds to do the buybacks.
Time for a new system
This means they’re using dollars paid by taxpayers to provide bonuses and other financial benefits to capitalist investors. The article quotes University of Southern California law professor, Edward Kleinbard, “Money is fund-able, and it’s very easy for multinational companies to find ways around these rules.”
The argument that there is no money to invest in the U.S. has no basis in reality. Buffett even admits that a lack of funds is not what hinders job creation. Banks need to make loans to major corporations. This is a fundamental contradiction within capitalism, which thrives off high-growth technology for corporations and low-wage labor positions that raise profits for companies, as it ignores the needs and rights of national and international workers.
This blatant exploitation is the rotten core that allows racism and xenophobia to thrive by pitting exploited worker against exploited worker for a brutal grasp at an undervalued position. No one benefits except corporate CEOs and the few within their financial clique.
These corporations swell their inflating profits with intangible, easily movable assets like intellectual property. These practices have been implemented and largely ignored for years, due to the false “success” of capitalism, which seeks to create economic growth that is unsustainable long term.
In essence, this generation of youth and students is living with the economic consequences of practices implemented and enforced before many were even born. They are forced to watch the generations before them be abandoned by corporations and businesses as “disposable.”
The Time article’s suggested solution is for infrastructure and education improvement or “launching a more cohesive national strategy to support strategically important industries like high-end manufacturing.” All of this states in a roundabout way that inherently, this system is impractical and unethical.
The article ends stating that tax-free money brought from abroad will create “yet another stimulus measure that benefits those who need it the least.” The capitalist system, however, has only ever been to the benefit of the few. The majority of humanity needs jobs at living wages and all the necessities of life, not tax breaks and wealth accumulation for the capitalist minority.