The story began nearly three years ago, with an initial impetus simply to replace a $5 billion annual tax break for American exporters that the World Trade Organization had ruled was illegal. It ended this week with a 633-page behemoth that offers new tax giveaways to everyone from corporate titans like Boeing and Hewlett-Packard to an array of oil and gas producers, shopping mall developers, wine distributors, even restaurants. Many companies, like General Electric and Dell, are likely to end up with far more tax relief under the new bill than they had ever received from the old tax break. Some, like Exxon Mobil, never qualified for the old tax break at all but will enjoy tax savings now.
...under heavy pressure from big multinational corporations, both chambers also included about $42 billion worth of tax reductions on the foreign earnings of companies based in the United States.
Corporate executives defended the tax cuts on foreign profits, saying that American companies were at a competitive disadvantage because most other countries tax profits earned only inside their borders.
To build support for their bills, House and Senate leaders openly invited lawmakers and industry groups to draw up their own wish lists for special tax provisions. By last spring, the Senate bill had ballooned to more than 700 pages.
It suddenly included billions of tax breaks for oil and gas companies and renewable energy that had been in last year's energy bill, which collapsed amid bitter partisan and industry feuding in November 2003.
This is ludicrously corrupt pork. Canned response to the 'tax incentive' talk:
Surveys and studies of TNCs have concluded that companies’ motivations for making direct foreign investments are based on five major strategic considerations. Firms are seeking: (1) markets for their products and services, (2) raw materials, (3) low-cost factors of production, such as labor, (4) knowledge, including technological and management expertise, and (5) political safety. Financial considerations, including potential tax liabilities, were found to be less important than these strategic motivations.
According to Site Selection magazine, quality labor, overall costs, business climate, and infrastructure are today’s top site-selection factors. In fact tax incentives can undermine the ability of governments to raise adequate revenues to pay for education, worker training and retraining, and infrastructure improvements, which have been found to be the key criteria in business site selection. Some respondents to a World Institute survey even suggested that incentives were counterproductive when they led to unproductive and unsustainable investments in underdeveloped areas.
