The d’oh! factor
Bush and his half-baked economic ideas have fostered a have, have-not economy
I have a slogan for the Bush administration: “D’oh!”
This president begins every new project, be it foreign or domestic, with the boyish enthusiasm of Homer Simpson. Just let his pals down at Moe’s plant the seed of a half-baked notion in his head, and George takes it from there.
Enthusiasm is a good thing when exercised by the rational and competent. But when exercised by a dimwit, all that passion and energy can only end with a resounding “D’oh!”
And so it has come to pass with another of George’s economic brainstorms. It all began after a few beers. The fellas at Moe’s were discussing how high U.S. corporate tax rates were forcing corporations to hide more and more of their profits overseas. Lenny suggested that maybe we could get that money repatriated if we gave those companies a freebie, let them bring the money back into their own country for practically nothing.
George, sipping his sarsaparilla, bolted upright. “Yeah, great idea. Could create jobs. Would create jobs. Those companies would use that money to create jobs. Billions of jobs.”
So, along with his other tax breaks, George added a measure that would allow companies that had hidden profits offshore to repatriate them without paying the full tax, normally around 25 percent. Instead, they would just pay postage and handling, 5.25 percent.
And it worked. Hell, how could it not work? Five and a quarter percent was even less than the tax havens were charging companies to shuffle all those peas around under shell company accounts. But to get that deal, companies had to get all that dough back into the United States before the end of this year.
Yes, it worked. After all, wouldn’t you agree, too, if it meant being in the 5-percent tax bracket?
We learned that companies had salted away about $350 billion offshore. At least, that’s how much they’ve admitted to so far. Had those companies paid their fair share of taxes in the first place, the U.S. Treasury would be about $90 billion better off than it is now. Instead, they were rewarded for their creative tax avoidance by being given a free pass.
Never mind that, George said. The jobs all that repatriated money would create here at home would more than make up for that little favor.
So, how did that idea pan out? Not so well.
According to that left-wing rag The Wall Street Journal, most of that money is being used by companies to buy back stock in their own companies and pay off old loans and boost executive compensation. But that’s not what they were supposed to do with the money.
And what of those jobs? Well, one of the companies that dug up its offshore stash was Colgate-Palmolive Co., which hauled home $800 million, for which the company said, “Thank you very much”—and then proceeded with plans to shut a third of its U.S. factories and eliminate 4,450 jobs.
So, how is George’s brainstorm going (that if we let the rich keep more of their money by giving them fat tax breaks, they will use it to create jobs)?
Only for those Americans in the top 1 percent (the nearly 1.3 million taxpayers who made at least $327,000) did incomes increase significantly more in 2003 than the rate of inflation. The top 1 percent of taxpayers received almost 17.5 percent of all income and paid a third of all income taxes in 2003, the Internal Revenue Service found. The top tenth of 1 percent received 7.57 percent of reported income and paid more than 15.3 percent of all income taxes.
And get this: The data also show that among major world economies, the United States in recent years has had the third greatest disparity in incomes between the very top and everyone else. Only Mexico and Russia, among major economies, have greater disparity.
There you have it, Bush’s brainstorm. More dough (d’oh!) for the rich.