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Obama Adviser Backs Tax Giveaway to the Rich

A high-profile outside Obama economic adviser is promoting a huge corporate giveaway that would slash taxes on $1.4 trillion in profits corporations have sheltered overseas, according to an article in The Kiplinger Letter.

The adviser, Laura Tyson, sits on the President’s Council on Jobs and Competitiveness, an outside advisory group that reports regularly to President Obama and is chaired by GE Chairman Jeffrey Immelt. She also chaired Bill Clinton’s White House Council of Economic Advisers.

According to the story, authored by veteran economics reporter John Maggs, Tyson is working with “a couple of dozen giant corporations” that are “spending millions” to convince Congress to nearly eliminate taxes for a year on the profits as long as the money is repatriated to the United States.

Obama opposes the change, according to the piece.

Supporters claim the tax holiday will boost the economy, even if the vast majority of the money is retained by companies and their shareholders. President Obama and most Democrats say the move is an unfair giveaway to the rich, and they cite research on a similar 2004 tax holiday that they say shows it produced few jobs.

Tyson authored a report arguing that repatriating the money to the United States would boost investment and stimulate economic growth. The report was paid for by the companies, who along with their well-to-do shareholders, would benefit.

Obama had been barnstorming the country slamming the wealthy for shirking their tax obligations.

Ironically enough, Tyson justifies the handout to the rich by invoking “trickle-down” economics.

Tyson’s defense is that the report’s economic reasoning is solid, and it is: If you distribute a trillion dollars to corporations and the wealthy, some will spill over to others.

Maggs wrote the article to illustrate how corporations routinely tap “revered experts” like Tyson to issue favorable reports that seem independent but that are actually fully bought and paid for.

9 Responses to Obama Adviser Backs Tax Giveaway to the Rich

  1. Continuing the Dem tradition of giving opinions on things we know nothing about; sure, let’s negotiate with the corporations holding money outside the US. The proposal sounds like an opening bid and if our government financial gurus have any sense they’ll get serious and make a counter-offer.

  2. This is pretty widely supported on Fox, too, though. The money is parked overseas…or invested in facilities not employing Ams. Some think a percentage would be used here…but it does come back to a need for new demand–if people are broke and can’y buy, why make things?

  3. Repatriation would have an exceedingly beneficial effect. We have historical precedent in this regard. In 2005, almost $318 billion of deferred foreign earnings was repatriated by American companies to the United States. As a result, corporate tax receipts rose by $17 billion that year. This money was used to pay down debt, shore up pension plans and increase wages. This is one of the easiest ways to create jobs.

    It is generally estimated that $1 trillion is currently sitting in overseas deferred accounts. If this money is repatriated, companies in possession of all that cash could increase stock buy-backs, investment in equipment and technology, catch up on pension liabilities or pay dividends to millions of shareholders. I would not underestimate the profound effect this could have as it ripples through our domestic economy. The phrase “trickle down” is too often used in a derisive sense, connoting a mean spirited hierarchy of economic benefits with the folks at the bottom getting the least of the benefits. It may be true that a single proposal, if enacted, cannot cure all that ails us. But the possibility of a ripple effect associated with importing as much as $1 Trillion into the US should not be ignored. The idea of repatriating cash that is basically “parked” off-shore in response to nothing more than yet another warp in space and time caused by our US Tax Code may very well be one of the least controversial palliative measures we can actually implement. I see that Laura Tyson supports this proposal. Do not be too quick to judge the policy by its advocate.