US banks 'laid off workers following tax holiday'

4 October 2011

A number of banks in the US laid off workers following a tax holiday in 2004-2005 that was presented as a form of economic stimulus, a newly-released report has shown.

Lenders such as Bank of America Corp and Citigroup - which is split into two groups, Citicorp and Citi Holdings - were among the ten major corporations involved, the Institute for Policy Studies claimed.

The group noted that while many large firms are currently pushing for another tax holiday, it should not be forgotten that the last such instance did not benefit the hundreds of thousands of workers across the country that it promised to assist, Reuters reports.

According to the report, 600,000 job cuts were made after 58 of the firms accounting for 70 per cent of overseas profits recouped under the tax break in 2004-2005 saved around $64 billion in taxes.

Co-author of the findings Chuck Collins said: "History shows that many tax holiday companies use repatriated profits to reward executives and other shareholders, then lay off workers. Corporate tax holidays have resulted in precious few US jobs."

By Claire Archer

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