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Study: Companies Got 22,000 Percent Return on Lobbying Investment Study: Companies Got 22,000 Percent Return on Lobbying Investment

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Study: Companies Got 22,000 Percent Return on Lobbying Investment

January 6, 2012
It's hard to quantify exactly what a company gets for its lobbying dollar, which helps explain why Washington offices are so often put on the expense, rather than the revenue, side of the ledger. 

But a recent study took a look at the 2004 repatriation act, which allowed companies to bring overseas profits back into the country at a fraction of the standard tax rate, and found a whopping 22,000 percent return on investment. That makes sense considering that temporarily dropping the tax rate from 35 percent to 5 percent can save a company billions of dollars. But it's  also incredibly unusual that legislation has such an outsized impact on so many bottom lines. 

So I offer up this NPR story with the kind of "results not typical, individual results may vary" kind of disclaimer found on so many late night infomercials: 

In 2004, economists found a bill so simple, so lucrative, that they could finally track the return on lobbying investment.

The American Jobs Creation Act benefited hundreds of multinational corporations with a huge, one-time tax break. Without the law, companies that brought profits earned abroad back to the U.S. had to pay a tax rate of 35 percent. With the law, that rate dropped to just over 5 percent. It saved those companies billions of dollars.

In a recent study, researchers Raquel Alexander and Susan Scholz calculated the total amount the corporations saved from the lower tax rate. They compared the taxes saved to the amount the firms spent lobbying for the law. Their research showed the return on lobbying for those multinational corporations was 22,000 percent. That means for every dollar spent on lobbying, the companies got $220 in tax benefits.
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