A senior Republican tax writer on the House Ways and Means Committee is introducing legislation that would give U.S. companies one year to bring home at a lower tax rate as much as $1 trillion in profits parked overseas.
The bill’s author, Representative Kevin Brady, a Texas Republican, describes the proposal as a jobs measure. The proposal would allow U.S.-based companies for one year to repatriate income earned overseas at a 5.25 percent rate, instead of the 35 percent statutory corporate rate.
Brady maintains the money could be used for investment in the U.S.
“This is about creating jobs, expanding U.S. businesses and strengthening American companies,” he said in a statement today.
The bill includes a penalty for companies that return the money at a lower rate and then reduce their workforce. Companies would have to add $25,000 to their taxable income each time they cut their total workforce below the company’s average.
With a 35 percent tax rate, the provision would increase the company’s tax bill by $8,750 for each job cut.
The bill faces an uncertain path in Congress. House Majority Leader Eric Cantor, a Virginia Republican, has supported a repatriation bill while Ways and Means Committee Chairman Dave Camp, a Michigan Republican, has said he wants to address the issue only in the context of a comprehensive tax overhaul. Treasury Secretary Timothy Geithner has echoed that sentiment.
The issue has received less attention in the Senate. The Obama administration opposes a repatriation holiday.
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