The government transparency mavens at the Sunlight Foundation point to a new report documenting how multinational corporations got a staggering 22,000 percent return on the money spent to hire lobbyists to push for a one-time 85 percent IRS tax break on worldwide income.
The bill the corporate giants fought so hard for? The inaptly named American Jobs Creation Act of 2004.
Writes Paul Blumenthal at Sunlight.com:
There’s a reason why lobbying has boomed so much over the last decade. The potential return on investment is just too lucrative to pass up. Some things are easy to quantify, a contract, an earmark, or a direct payment for services. But other things, like tax breaks, can take a little bit more time to figure out (at least for now). For example, a University of Kansas study, released Thursday, will show that firms pushing for a “tax holiday” in 2004 received a 22,000% return on their lobbying investment. I’ll write that number again: 22,000%. From the AP:
The report details efforts by hundreds of companies in 2003 and 2004 to push through a one-time tax “holiday” that lowered for a year the tax rate they paid on profits earned abroad. All told, U.S. companies saved about $100 billion in taxes, with pharmaceutical behemoths Pfizer and Merck & Co., technology giants IBM and Hewlett Packard, and health products maker Johnson & Johnson among the top beneficiaries.
The study zeros in on 93 firms that spent as much as $282.7 million lobbying on the issue during that period, and ultimately saved a total of $62.5 billion through the tax change. Researchers used publicly available lobbying disclosures filed with Congress and financial statements submitted to the Securities and Exchange Commission to compare the amount each company saved with its lobbying expenditures.
“It calls into question what Congress did in 2004,” said Stephen Mazza, who conducted the study with Raquel Alexander and Susan Scholz. “It clearly is a very lucrative field for lobbyists. Congress wanted to create jobs, and what they probably did was create jobs for the lobbyists.”
The Congressional Budget Office and Joint Taxation Committee estimate that the tax break “will decrease federal revenues by about $4.9 billion in 2005, $10.1 billion over the 2005-2009 period, and about $6.8 billion over the 2005-2014 period.”
That’s a lot of samolians but what does it mean to grandma?
The CBO/JTC forecasts a $570 million shortfall in the Medicare budget, $270 million less to energy, $300 million missing from natural resources and the environment, a $350 million hole in agriculture, justice is $750 million short and general government spending decreases a whopping $800 million.
Nice work if you can get it.