Republican Introduces Bill to Institute Tax Holiday for Multinational Corporations
Rep. Keven Brady (R-TX) has introduced a piece of legislation that would allow American multinational corporations to bring cash back to the U.S. they are hoarding offshore at a discounted tax rate.
Currently, American multinationals have up to $1 trillion sitting offshore. Normally, that cash would be taxed at a 35 percent rate when it is returned to America. Under the Brady bill, they could return their cash to America at a rate of just 5.25 percent.
“This is about creating jobs, expanding U.S. businesses and strengthening American companies,” Brady said in a statement today.
To ensure that the companies did use the money to create jobs, the legislation would add $25,000 to their taxable income each time they cut their workforce below the average number of employees prior to the institution of a tax holiday.
Brady has the support of most of his own party and numerous powerful business interests. However, there are also many opponents of the provision who say that the measure would cost the U.S. Treasury billions of dollars.
According to the Joint Committee on Taxation, the legislation would cost about $78.7 billion.
Many opponents of the measure point to the fact that a similar tax holiday in 2004 was supposed to be a boon to the economy. That year, multinational companies brought back about $300 million in overseas profits at a discounted rate. However, the economic benefits were few and far between, except for those few companies that benefited directly.
“It was a major failure the first time around, and it’s going to be worse this time,” Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities, told Bloomberg News. “You make it a regular occurrence; you make it an incentive to shift profits and investments overseas.”
The bill currently has three Democratic co-sponsors. Yet, one of the most powerful lawmakers from Texas is firmly against the passage of the bill.
Rep. Lloyd Doggett said that allowing corporations to return money to America at a discounted rate will have no beneficial impact on average American citizens.
“Our economy will see little benefit in rewarding large multinationals for shipping even more jobs and revenue offshore, though wealthy shareholders may see substantial benefits,” he said, according to The Wall Street Journal.
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