U.S. Tax Holiday for offshore profits shouldn’t be repeated

U.S. Tax Holiday Shouldn’t See Repeat: Report – Bloomberg.

Tax holiday of 2004 was a bonanza for corporations most of which showed no incline to invest or create jobs in this country. Instead, they bought their own stock, raised executive compensation, and some even moved facilities overseas laying off Americans in the process.

Pfizer, IBM, and DuPont all reduced U.S. employment between 2004 and 2007, after they benefited from tax holiday.

The holiday allowed American corporations hiding profits overseas, away from taxation, to return those moneys to the U.S. and be taxed at a rate of 5.25%

U.S. based corporations pay a nominal 35% tax although that is reduced through credits and deductions.

Instead, legislation should be created to tax those offshore profits even if they are not returned to the U.S. Otherwise, it encourages more capital flight.