Bipartisan support in Congress for a corporate tax holiday is growing thanks to an effort to tie repatriation to jobs legislation.
Repatriation supporters had been calling for Congress to reform the tax code for some time. Then, Sen. Charles Schumer (D-NY) last week indicated a repatriation tax holiday could be approved in order to secure passage of parts of President Obama’s $447-billion jobs bill, which failed to come to a full vote before the Senate.
Multiple bills have been offered by lawmakers from both political parties. Perhaps the one with the best chance of passage comes from Sens. Kay Hagan (D-NC) and John McCain (R-AZ), who introduced S. 1671, the Foreign Earnings Reinvestment Act. Their bill adopts language similar to a House version, H.R. 1834, the Freedom to Invest Act, sponsored by Rep. Kevin Brady (R-TX).
Both bills would establish a one-year corporate tax reduction from the current rate of 35 percent to a two-tier rate starting at 8.75 percent and falling to 5.25 percent if a business shows an increase of at least 10 percent in either salary or hiring of “qualified payroll” employees. A penalty would be levied for businesses that cut their payrolls during the calendar year.
AFP began 2011 with a letter
to the 112th Congress urging its members to lower the corporate tax
rate on foreign earnings to encourage domestic investment. AFP supports legislative efforts to enable businesses to liberate foreign cash. Moreover, AFP believes that allowing businesses to repatriate foreign earnings at tax rates comparable with other nations will enhance the stalled U.S. economic recovery.