The IPS examination is the latest in a slew of studies on the idea of a tax holiday, as policymakers debate whether to allow American corporations to temporarily bring offshore funds into the U.S. at a much lower tax rate. The previous holiday taxed repatriated funds at a 5.25 percent rate, far below the top corporate rate of 35 percent.
The WIN America Campaign, backed by corporate heavyweights like Apple, Cisco and Oracle, has been pressing lawmakers on the issue – arguing that a holiday has bipartisan support, could pour billions of dollars into the U.S. economy and also act as a steppingstone to broader tax reform.
But previous studies have shown that funds repatriated during the last holiday were often used for dividend payments and stock buybacks, and that companies that took most advantage of the holiday cut jobs in 2005 and 2006.
IPS takes those studies even further, finding that 58 multinationals who used the holiday laid off close to 600,000 workers between 2004 and now.
Citigroup and Bank of America, both of which received funds from the government’s Troubled Asset Relief Program, were among the leaders in layoffs – with roughly 73,000 and 65,000 respectively.
In all, Citigroup, Bank of America and eight other corporations – including Hewlett-Packard, Verizon and Ford – accounted for almost 450,000 layoffs, the study found.
IPS does note that most layoff releases don’t specify exactly where jobs are being scrapped, but adds “it is reasonable to assume that in most instances job reductions disproportionately affect U.S. employees.”
In its study, the group also calls on Congress to pass legislation targeting tax havens, signaling that would remove some of the incentive companies have to shift profits abroad.
The IPS and Heritage studies underscore that support and opposition for a tax holiday doesn’t break down cleanly on party lines. (In its study, Heritage argued that corporations already have access to all the capital they need, so an influx of new cash wouldn’t be a boon to the job market.)
On the flip side, Douglas Holtz-Eakin, who advised Sen. John McCainJohn Sidney McCainBiden seeks to ward off second Ukraine-Russia fight Voto Latino CEO: Sinema will have a 'very difficult pathway' in 2024 reelection Meghan McCain rips 'selfish' Sarah Palin for dining out despite COVID-19 diagnosis MORE’s (R-Ariz.) presidential campaign, and Robert Shapiro, a Clinton administration aide, have authored studies backing the idea, for the U.S. Chamber of Commerce and NDN, respectively.
House Majority Leader Eric CantorEric Ivan CantorRepublicans eager to take on Spanberger in Virginia Virginia emerging as ground zero in battle for House majority McAuliffe's loss exposes deepening Democratic rift MORE (R-Va.) and Rep. Kevin BradyKevin Patrick BradyOn The Trail: Retirements offer window into House Democratic mood Members of Congress not running for reelection in 2022 Trump war with GOP seeps into midterms MORE (R-Texas) are among the prominent GOP lawmakers behind the idea, which also has support from liberals like Andy Stern, the former president of the Service Employees International Union.
But Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, and the Obama administration have both signaled that they would rather deal with repatriation in the broader tax reform discussion.
On Tuesday, WIN America, the group lobbying for a holiday, also pushed back against the new Heritage study, noting that the group had published a study praising the idea less than a year ago.
As for the IPS study, Doug Thornell, an adviser to WIN America, said in a statement that "a study blaming seven years of job losses on repatriation is truly bizarre and isn't worth the paper it's printed on."
This post was updated at 7:55 p.m.