The Heritage Foundation, a conservative think tank, has changed its position on giving U.S. companies a tax break on overseas profits.
The organization will argue in a paper to be released Tuesday that a so-called repatriation tax holiday won’t spur U.S. job growth or investment, according to the Wall Street Journal. That’s a shift from their position in 2010, when The Heritage Foundation urged cutting taxes on foreign earnings "to encourage companies to repatriate the profits to America."
The change in policy recommendation comes as companies such as Google and Apple are revving up lobbying efforts to get a repatriation tax holiday passed, according to Bloomberg. The companies and others have hired more than 160 lobbyists, including at least 60 who used to be employed by a sitting member of Congress, to press for the tax break, Bloomberg reported.
Congress passed a repatriation tax holiday in 2004 that did little to spur job growth, according to a U.S. Treasury Department analysis. Treasury found that five U.S. firms received more than 25 percent of the benefits. Furthermore, the companies that gained the most from the tax holiday actually cut jobs from 2005-2006, the Treasury found. Instead, many of the companies used the money gained from the holiday to buy stock.
This is typical of tax holidays aimed at spurring job growth, according to Joseph Thorndike, the director of the Tax History Project. Thorndike wrote in a Bloomberg View column in June that tax credits geared towards boosting employment are “inconsistently effective and notoriously hard to focus.”
That could be because some company CEOs don’t take the tax rate into account when making hiring decisions. Garrett Gruener, an Oakland venture capitalist and the founder of Ask.com said fluctuations in his tax rate make “zero difference” in his hiring and investment decisions, according to Think Progress.
Gruener is part of a group called the Patriotic Millionaires, an organization of millionaires formed in November 2010 to advocate for an end to the tax cuts for the wealthy enacted during the George W. Bush administration.
Famed billionaire Warren Buffett also took a similar stance recently, arguing in an August New York Times op-ed for a tax increase for millionaires. President Barack Obama adopted Buffett-inspired plan as part of his proposal to reduce the budget deficit in September. Obama was met with accusations from Republican leaders that by adopting the plan he would be promoting “class warfare.”