Kansas professors find companies got big returns on investing in lobbyists

A 22,000 percent return on investment?

Three professors at the University of Kansas say dozens of America's largest companies got that sweet deal four years ago – not by hiring workers or purchasing new equipment, but by investing in Washington lobbyists.

Those lobbyists, the three said, helped write a federal tax break that eventually put roughly $100 billion in tax savings in the pockets of the firms and their shareholders, at a cost to the companies of just pennies on the dollar.

Stephen Mazza, a professor at KU's School of Law, and two associates spent six months examining the effects of one part of the American Jobs Creation Act, a major tax overhaul passed in October 2004. They looked at a provision that gave companies a one-year window to bring overseas earnings back into the U.S. at a 5.25 percent tax rate, rather than the usual 35 percent, as a jobs-creation incentive. The three professors then looked at how much such companies as IBM, Pfizer, and Eli Lilly and Co. spent lobbying for the break, and how much they saved when it passed.

The result? Ninety-three of the country's biggest multinational firms pulled in tax savings of more than $62 billion – after spending just $283 million to lobby for the bill.

The study concluded that almost 500 companies got an average 22,000 percent return on their lobbying investments.

"Is this how you want policy enacted?" asked Bill Allison of the Sunlight Foundation, which watches political spending and lobbying. "Whoever has the biggest access to lobbyists and to Washington insiders gets the tax relief?"

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