Why do firms lobby? A 22,000 percent return.

[groundloop]

From an article in the Christian Science Monitor...

http://features.csmonitor.com/economyrebuild/2009/04/10/why-do-firms-lobby-a-22000-percent-return/



The next time an industry asks Congress for a bailout, remember this number:

22,000 percent.

That’s the return that that a new study says US corporations made off their lobbying efforts in 2003 and 2004 after convincing lawmakers to let them bring home their overseas earnings at a low tax rate. The benefits of the American Jobs Creation Act and related provisions were stunning – for the corporations.

Spend $1, make $220

For every $1 they spent on lobbying for the tax break, corporations reaped a $220 benefit on their US income taxes, according to three University of Kansas professors. Some 840 firms – including several of today’s bailout babies, including Citigroup, JP Morgan, Morgan Stanley, and Merrill Lynch – repatriated more than $312 billion at a maximum tax rate of 5.25 percent.

Companies that spent more than $1 million on tax lobbying did even better: a 24,300 percent return, the researchers found. For example: In its disclosure statements, drugmaker Eli Lilly & Co. acknowledged spending $8.52 million in 2003 and 2004 to lobby for the tax break. It reaped more than $2 billion in return.

......
That onetime benefit in 2004 had a perverse effect, Mr. Mazza said. The corporations that had done the right thing and had their earnings taxed at normal US rates suddenly saw other companies rewarded for their more aggressive tax-saving strategies. So what did those corporations do?

They pushed more of their earnings offshore, according to recent research, Mazza said. And they lobbied – unsuccessfully – for another repatriation tax break in this year’s stimulus package......

[BeFree]

1. Who'd they lobby?

They lobbied congress. Congress is 535 sitting ducks. Spread all that lobbying money over those 535 ducks and bake at 350 for a few days and what do you get? A feast for the lobbyists.

Congress can't take the heat. Just imagine if the people got together and turned up the heat on congress? We could all put a feather in our cap, eh?

[old mark]

2. I recall reading years ago that this does not work the way most people

think it does. The lobbyists don't nevessarily go searching for congresspersons - our elected reps have someone from their office call the appropriate lobbyist and "remind" him that Congressman Swine might appreciate a donation to his PAC fund "in the interest of good government". A congress person can legally have a spouse and or children on the payroll of a PAC.

mark