Hint: Think “K Street.”

Remember the balmy days of the “repatriation tax holiday” — more properly known as the American Jobs Creation Act (AJCA) of 2004? The law gave multinationals based in the United States a one-time, one-year opportunity to repatriate their foreign operations’ earnings at the massively reduced tax rate of 5.25 percent, instead of the typical 35 percent.

University of Kansas professors Raquel Meyer Alexander, Stephen Mazza, and Susan Scholz remember those times well. In a new study released today, they look at how much the companies that lobbied for the tax break gained from it.

The professors found that the AJCA provided significant tax savings to a relatively small group of larger, older, and more profitable companies, according to a University of Kansas news release. No surprise there. The real eye-opener is that corporations that invested in lobbying efforts received, on average, $220 for every dollar they spent. For example, Eli Lilly spent more than $8.5 million and realized tax savings of more than $2 billion.

The tax policy implications are “troubling,” the professors rightly conclude.

A massive lobbying push to insert something very like the AJCA’s repatriation provisions into the economic stimulus package collapsed earlier this year after the Senate Permanent Subcommittee on Investigations announced it would ask companies to explain how they used the tax savings. To qualify for the break, businesses were supposed to plow the cash into approved investment plans aimed at job creation. The Treasury’s guidelines for these programs were broad, though, covering expenditures ranging from advertising and marketing to debt reduction, and from capital investment to some types of business acquisitions. As for how the money was actually spent … who knows?

Did the AJCA actually do what it was supposed to do — create American jobs?

It’s doubtful. Strangely, only 843 of some 10,000 eligible corporations took advantage of the deduction, according to a June 2008 analysis by accounting firm Grant Thornton. And many businesses that did repatriate ended up cutting jobs anyway. For example, Pfizer repatriated $37 billion but chopped 9,000 jobs in 2005, according to a Congressional Research Services report.

Even so, as the debate over offshore “tax loopholes” continues to unfold, we may yet hear more calls for a Repatriation Holiday v.2. ###