Here's a tax holiday that we don't need

Alana Miller

is a program associate with the Pennsylvania Public Interest Research Group (Penn PIRG)

An army of lobbyists on Capitol Hill is trying to convince Congress that after stashing nearly $1.4 trillion offshore to avoid paying U.S. taxes, corporations should get a massive tax discount for bringing the money back to America.

We've done this before.

In 2004, Congress gave corporate America a "repatriation holiday" on the promise of job creation. Yet rather than hiring workers, the firms that benefited most actually shed jobs, bought their own stock to boost the price, and increased executive pay. Anticipating the next holiday, they then shifted even more profits offshore. Small businesses and ordinary taxpayers who can't afford high-priced attorneys or accountants were left to foot the bill.

More than 80 of America's largest 100 publicly traded companies make use of offshore tax havens, which cost U.S. taxpayers $100 billion a year in lost revenue. Some of these subsidiaries are nothing more than post office boxes. In fact, 18,857 "corporate headquarters" are registered at a single address in the Cayman Islands. General Electric paid zero dollars in U.S. taxes on its American profits in 2010.

Here in Pennsylvania, to make up for tax dodgers, the rest of the state's individual tax filers had to pay more than $4.4 billion in 2010, according to a study by Pennsylvania Public Interest Research Group. That breaks down to each taxpayer paying on average an extra $464. If a corporation benefits from American education, infrastructure, and national security, it should pay the taxes it owes to America.

A tax holiday allowing corporations to pay 5 to 8 percent on profits they've kept offshore instead of the normal 35 percent would only reward companies that have shirked their tax responsibility.

The vast majority of U.S. corporations would not benefit at all. A study recently released by the Senate Permanent Subcommittee on Investigations found that just 0.015 percent of corporations could take advantage of the repatriation holiday in 2004. Pharmaceutical and high-tech giants accounted for nearly half of the returned funds.

While a tax holiday is wrong on principle, research shows that it also doesn't help the economy.