Tax Holiday

Campus Report ^ | April 8, 2009 | Alanna Hultz

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Tax Holiday

by: Alanna Hultz, April 08, 2009

The American Jobs Creation Act of 2004 was enacted in response to a World Trade Organization order and European Union trade sanctions related to a little known tax break for U.S. exporters. Included in the American Jobs Creation Act of 2004 was a one-time tax holiday for the repatriation of foreign earnings by U.S. multinationals, which allowed 800 corporations to repatriate 300 billion at a reduced tax rate. Recently, Senator Carl Levin (D-Mich), chairman of the Permanent Subcommittee on Investigations, initiated an investigation to examine whether these firms used the repatriated earnings to generate jobs, as was intended. At an American Enterprise Institute event, University of Connecticut economist, Dhammika Dharmapala discussed the results from his paper on the tax holiday and Alex Brill, AEI and Rohan Williamson, Georgetown University discussed the paper’s findings and its implications for future tax policy.

Dharmapala explained, “the Homeland Investment Act was enacted in 2004 as part of the American Job Creation Act. The HIA’s purpose was to increase investment and employment in the U.S. He also noted the unemployment rate in October 2004 was 5.5 percent and the unemployment rate for March 2009 is 8.5 percent. He said “in February 2009 a similar measure was defeated by the Senate.” Dharmapala’s paper took two approaches when examining the tax holiday, data and empirical study. He said “I used confidential data on all U.S. MNC and foreign affiliates.” Dharmapala’s study of the tax holiday found there was no increase in domestic investment or employment by firms that repatriated under HIA. He said “there was no significant change in investment or employment and firms that repatriated under HIA increased payouts to firms.”

So what did firms do with the money?....

[meandog]

The Lord Barack is my shepherd, I shall always want
He maketh me to lie down under bridges
He leadeth me besides the still factories
He leadeth me in the path of destruction for Democrats’s sake
Yea, though I walk through the valley of dispair, I fear every evil for he is with me!
His policies and diplomacies, they frighten me
He prepareth a reduction in my salary
And in the presence of my enemies, he annoiteth my small income with taxes.
My debt runneth over,
Surely badness and misery shall follow all the days of my life.
And I shall live in his house of socialism forever!