Research challenges claim by likes of Apple and Google that a new tax holiday would lead to new investment and job creation

As some of America's biggest corporations push for a tax holiday on more than $1tn of overseas profits, a new survey has revealed that the last time such a measure was tried it ended in the loss of hundreds of thousands of jobs.

The study could be a setback to the aggressive push by a coalition of American businesses, called Win America, which includes big-name firms like Apple, Google and Pfizer. The group has employed more than 160 lobbyists to push its agenda, claiming that the companies will use the tax break to bring back money overseas and invest it in building new facilities and creating jobs.

But a report carried out by the Washington-based Institute for Policy Studies has examined the last time such a move was carried out. That was in 2004, when a similar scheme allowed 843 firms to cut their tax rate on repatriating overseas profits from 35% to 5%.

The firms then brought home $312bn and avoided paying $92bn in government taxes in return for a promise to create jobs. The measure was called the American Job Creation Act.

However, the IPS study measured the actions of some of the largest firms who took advantage of the tax holiday, and found that 58 of them had then slashed 591,000 jobs. The companies accounted for a massive 70% of the repatriated funds, and saved around $64bn they would have otherwise paid out in taxes. The firms included Ford, Pfizer, Eastman Kodak, General Electric and Verizon.

Chuck Collins, one of the co-authors of the IPS report, said the companies simply did not use the huge cash windfall for investing in jobs or new facilities that might employ people.

"It was a tax break. It was a tax dodge. There is no accountability. They cut jobs and used some of the money to fund mergers and acquisitions and to pay dividends and to pay more to top managers," Collins said.

One particular example was General Electric. The study found that the firm brought back $1.2bn in 2004 under the low tax rate. But between 2004 and 2010 it ended up actually cutting its American workforce by 32,000. It immediately reverted to stashing profits off shore, and GE now has $94bn stored overseas.

Collins said that the one-off tax holiday in 2004 had actually encouraged American firms to off-shore their profits by holding out the prospect that the government would repeatedly offer such tax holidays. "It tells companies they can off-shore profits in the medium term and then bring them back in the long term," he said.

Indeed, Win America – which represents dozens of US firms and branches of the Chamber of Commerce – is now engaged in a massive lobbying effort to persuade the White House to embark on another similar scheme. A recent investigation by Bloomberg News showed that more than 160 lobbyists are pushing for a new tax holiday. They include at least 60 who have worked for sitting members of Congress, which likely gives them more powers of persuasion and greater reach into the heart of government.

Advocates for the tax break say that it could bring home at least $1tn and create millions of jobs. The group's roster of lobbyists include top names from both Democratic and Republican circles like Tony Podesta and Robert Livingston, a former GOP congressman from Louisiana. They say that the return of hundreds of millions dollars of cash would boost America's flagging economy at a time when there is a real threat of a dip back into recession.

On its website, Win America's mission statement puts the case bluntly: "The time to act is now. Let's invest the money here at home, not spend it strengthening other countries' economies."

Collins believes that there is a real chance of the effort being successful, and of a new tax holiday being brought it. "The momentum is on their side," he said.

However, he pointed out that according to the Federal Reserve, American corporations were already sitting on cash reserves of almost $2tn.

"They have huge cash reserves and they have no track record of using those reserves to create jobs," Collins said.