The report details efforts by hundreds of companies in 2003 and 2004 to push through a onetime tax holiday that lowered for a year the tax rate they paid on profits earned abroad. All told, US companies saved about $100 billion in taxes, with pharmaceutical behemoths Pfizer and Merck & Co., technology giants IBM and Hewlett Packard, and health products maker Johnson & Johnson among the top beneficiaries.
The study zeros in on 93 firms that spent as much as $282.7 million lobbying on the issue during that period, and ultimately saved a total of $62.5 billion through the tax change. Researchers used publicly available lobbying disclosures filed with Congress and financial statements submitted to the Securities and Exchange Commission to compare the amount each company saved with its lobbying expenditures.
"It calls into question what Congress did in 2004," said Stephen Mazza, who conducted the study with Raquel Alexander and Susan Scholz. "It clearly is a very lucrative field for lobbyists. Congress wanted to create jobs, and what they probably did was create jobs for the lobbyists."
The results reflect one reason that lobbying, always a major industry in Washington, has experienced explosive growth in recent years. Companies and interest groups spent $3.42 billion lobbying Congress and the federal government in 2008, the last year for which figures are available, according to the Center for Responsive Politics. That's a 14 percent jump from the previous year.
And there is growing evidence that companies get what they pay for, maybe a lot more, after they hire seasoned Washington hands to help navigate major legislative fights.
A separate group of business professors reported last year that companies that lobbied had better market valuations and investment returns than those that did not, and those that did so most intensively had portfolios that consistently outperformed the market.
Hui Chen of the University of Colorado, David C. Parsley of Vanderbilt University, and Ya-Wen Yang of the University of Miami found that, on average, a company's income rose by more than a half-percent for every 10 percent more it spent on lobbying. That translates into many millions of dollars for a large firm.
