deadlines amuse me

exploring how the world works and why it works that way …

The jobs creation act that doesn’t create jobs

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How’d you like — just once — to get a break on your income taxes? How’d you like to pay — just once — only about 5 percent of your income instead of 30-ish percent to Uncle Sam?

Well, you can’t. But thanks to the American Jobs Creation Act, some of America’s largest corporations can — just once — get a break on taxes on profits they’ve been accumulating overseas but have not repatriated. According to a New York Times story Tuesday, the act ” allows companies to pay 5.25 percent rather than 35 percent on the foreign profits.” The company must also file a plan on what it intends to do with that money. Remember, this is called the “jobs creation” act.

So who’s doing what?

Hewlett-Packard has, the Times say, about $14 billion in overseas profits it wants to return to home soil. But … the company that has cut about 25,000 jobs in the past three years plans to continue to reduce its workforce, it says.

Howzat job creation?

Proctor & Gamble has about $10.7 billion parked overseas, the Times says. The “jobs creation” act would allow it to use the money to help buy its competitor, Gillette, for $57 billion.

Now, now. We all know that when one company swallow another, it seeks “cost efficiencies” — that means people lose their jobs.

So how will the devilish P&G — if it uses its tax break to help acquire Gillette — actually do some “job creation”?

The big winner in this tax-break sweepstakes appears to be Pfizer — which has $38 billion to bring home to momma. (Disclosure: My brother works for Pfizer.)

And Eli Lilly, Bristol-Myers Squibb, Johnson & Johnson and Schering Plough have a combined $37 billion to bring home.

Sooo … will Big Pharma end up in a “jobs creation” mood?

Hardly, the Times says: “Far more likely, Wall Street analysts said, is that the companies will use their tax windfall to license drugs from others, take over other companies or simply shore up their balance sheets.”

In all, there’s about $400 billion that American companies have sitting overseas that this law will allow them to bring home at only 5 cents on the dollar in taxes.

Okay, so there’s good reason for Joe Citizen to be irritated. But maybe these enormous corporations will actually use this money to fulfill the part of the law that requires “homeland reinvesment.” Maybe we’ll see more jobs created. Maybe they’ll obey the spirit of the “jobs creation” act.

Now, now, stop laughing.

Here’s the sad, sad point:

How well will mainstream journalism — you know, CNN, the big networks (well, they’re so big anymore, are they), our “national newspapers” like the Times, Washington Post, LA Times, etc. — actually cover the story?

Will American journalism keep close tabs on what company brings home how much money, report how much was paid in taxes, and tell us what was done with the money?

I’m not optimistic. After all, these are some of America’s largest corporations. What influence do you think they might have on America’s largest media corporations?

When big money is being spread around, you’re unlikely to hear about it on the front page.

Even the Times’ Tuesday report was parked on C1, not A1.

And that’s just sad.


Written by Dr. Denny Wilkins

February 2, 2005 at 12:41 pm

Posted in Uncategorized

One Response

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  1. Oh boy
    The last thing in the world you need is a blog. That said, it’s quickly been added to my favorites.
    Hope all’s well in the Southern Tier.


    February 2, 2005 at 7:14 pm

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