By NICLE TICHON
With any opportunity that seems too good to be true, there is often a fatal flaw.
That is the case with The Partnership to Build America Act, introduced by Representative John Delaney (D-Md.) in the U.S. House and Sen. Michael Bennet (D-Colo.) in the U.S. Senate.
The bill offers a way for multinational corporations to bring profits stashed off-shore back to the United States and finally pay tax on those profits, albeit a minuscule one, in exchange for purchasing bonds that would fund infrastructure projects. It seems to offer something for everyone, Democrat and Republican alike. But upon closer examination the bill is full of flaws and ends up rewarding those companies that ship profits offshore to avoid tax.
Let’s start with a basic question: why are we rewarding bad behavior? For years, companies have been hiding money in low or no-tax countries in an effort to minimize their tax bill, and in doing so have raised the tax burden on individuals and small businesses. Why should we reward behavior that has made things tougher on average Americans and job incubators, small businesses? And what is to stop corporations from continuing to hide profits in off-shore tax havens after this so-called “tax amnesty” expires?
In 2004, a similar program was enacted, the corporations that did bring profits home used them mostly to offer dividends to stockholders. Many did not invest in U.S. operations or create jobs, as they had promised. It provided no benefit for the economy and many of the corporations that participated actually reduced employment.
Delaney and Bennet would have us believe that they’ve solved this problem by requiring these corporations to buy bonds from this proposed infrastructure bank. But here too, the idea is fundamentally flawed.