Will a Corporate Tax Holiday Give Workers Anything to Cheer?

Apple alone is sitting on an overseas stash of almost $260 billion, according to Bloomberg, while Microsoft has more than $120 billion parked abroad. The pharmaceutical giant Pfizer does not regularly disclose how much of its offshore profits are stored in foreign tax havens, but the Institute on Taxation and Economic Policy estimates that at the end of 2016, it held almost $200 billion abroad.

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Pfizer products being packaged for shipping in Lincoln, Neb.

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Dave Weaver/Associated Press

Of course, the standard claims are being made about the vast stimulative effects of the repatriated cash. They are being met this time with vigorous counterclaims based on the results of the Bush administration’s shot over a decade ago.

Back then, companies found their way around regulations forbidding this use of the money to simply benefit shareholders and corporate chiefs. A Senate commission reported that the top 15 repatriating corporations reduced their overall United States work force by 20,931 jobs, even as share buybacks increased and the annual compensation for their top five executives jumped 27 percent from 2004 to 2005 and another 30 percent the next year.

Pfizer, for instance, brought back $35.5 billion, the largest amount repatriated by a single company during the tax holiday, according to the Senate report. Then it turned around and spent over $20 billion in stock repurchases from 2005 to 2007. By 2007, the aggregate compensation of its top five executives was nearly $13 million higher than in 2004. Its United States payroll was 12,000 smaller.

The pattern was similar across most repatriating companies. Hewlett-Packard, which brought home $14.5 billion, bought back $22 billion worth of stock over the three years and cut its payroll by more than 8,500. The tobacco company Altria, which brought over $6 billion home during the holiday, spent $2.5 billion on share buybacks and bumped pay in the executive ranks by more than $50 million, but cut 6,000 jobs.

A few years back, Ms. Forbes explained to my colleague Floyd Norris how the computer manufacturer Dell had lobbied hard for the holiday — claiming that part of the money would be used to build a plant in Winston-Salem, N.C. “They did bring back $4 billion, and spent $100 million on the plant, which they admitted would have been built anyway,” she said. “About two months after that, they…

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