The 15 companies that benefited the most from a 2004 tax break for the return of their overseas profits cut more than 20,000 net jobs and decreased the pace of their research spending
.. “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,”
.. repeating the 2004 repatriation tax break has already come under criticism from skeptics, including the conservative think tank the Heritage Foundation, who have argued that companies aren’t low on capital and the tax break won’t nudge them into making any investments they wouldn’t already make.
.. The five companies that benefitted the most from the 2004 tax break included Pfizer Inc.,PFE -0.08% Merck & Co . MRK -0.11% , Hewlett-Packard Co. HPQ +0.14% , Johnson & Johnson JNJ -0.49% and International Business Machines Corp. IBM -1.11% , repatriating $88 billion, or 28% of the total amount brought back to the U.S., according to the report.
.. The report noted that Pfizer had the single largest share of the repatriated profits, bringing home $35.5 billion in foreign earnings, while also cutting 11,748 U.S. jobs between 2004 and 2007. Similarly, IBM brought back $9.5 billion, but cut 12,830 jobs
.. Meanwhile, the top 15 repatriating companies also accelerated their spending on stock buybacks and executive compensation after the tax break. The top five executives at those 15 companies saw their compensation rise 27% from 2004 to 2005 and then another 30% between 2005 to 2006.
.. Companies brought back funds held in areas that the Government Accountability Office has labeled tax havens, including Switzerland, the Bahamas, Bermuda, the Cayman Islands and Ireland. Of the 19 companies surveyed by the committee, seven repatriated between 90% and 100% of their funds from tax havens.