By David Cay Johnston
The author is a Reuters columnist. The opinions expressed are his own.
The practice of favoring big corporations seems likely to take a costly leap forward soon, if Congress passes an $80 billion tax holiday for a handful of U.S. multinational corporations with untaxed profits overseas.
Sponsors of legislation to grant the holiday, which is gaining support in Congress, say it would encourage these companies to repatriate their profits, giving an infusion of cash to the sluggish U.S. economy that will create jobs.
But this ignores the negative impact on the losers: the other 99 percent of corporations who are not eligible for such a deal. Then there are the legions of workers likely to be pink-slipped, and taxpayers generally, who will have to make up the shortfall with more taxes and fewer services.
There are smarter ways to deal with the $1.4 trillion of U.S. profits sitting offshore and avoiding the U.S. corporate income tax. We’ll get to those solutions. But first, here are some facts on how the system works.