A coalition of American-based corporations calling for a tax holiday on overseas profits say the Obama administration is looking at the issue from the wrong perspective.
The question, they say, is not whether a so-called repatriation holiday would distract from the push for corporate tax reform, as a top Treasury official asserted on Wednesday. The question is whether the government wants those offshore profits returned to the United States at all.
“So the real choice is not a tax holiday versus reform — it’s do we want money returned to the U.S. economy or do want it invested in competing economies overseas?” David Chavern, the Chamber’s chief operating officer, asked in a Wednesday blog post.
“Unfortunately, our broken tax system currently penalizes U.S. businesses that want to bring their global earnings home,” Doug Thornell, an adviser to the business coalition and former spokesman for Rep. Chris Van Hollen (D-Md.), said in a statement.
Still, it appears the Chamber and the WIN America campaign — composed of about 15 corporations, including Google, Microsoft and Apple — have some significant lobbying hurdles in front of them if they want to see Congress approve legislation similar to the repatriation holiday enacted in 2004. That law allowed corporations to bring profits stateside at a tax rate of 5.25 percent, well below the top corporate rate of 35 percent.
Both Chavern and Thornell were responding to the Treasury Department — which stressed again on Wednesday it would not consider a tax holiday outside of broader corporate reform. The department also said it was skeptical of the economic benefits of such a policy.
In a blog post, Michael Mundaca, the assistant Treasury secretary for tax policy, cited a raft of data to back his point that the last repatriation holiday did not exactly spark job investment here, including a report that declared that some of the corporations that benefited most from the policy actually shed U.S. jobs in the ensuing years.
The idea of a tax holiday does have some prominent backers on Capitol Hill, notably Rep. Eric Cantor (R-Va.), the House majority leader. But it also has some notable detractors. A repatriation proposal attracted the support of only 42 senators when it came up during the stimulus debate.
A spokeswoman for Rep. Kevin Brady (R-Texas), a member of the House Ways and Means Committee, said the congressman hopes to introduce bipartisan repatriation legislation in the next couple of weeks.
With all that in mind, the WIN America Campaign understands it needs to conduct a sort of political triage because of how some companies acted during that holiday some six years ago.
The group is hoping to circulate information that it says illustrates the positive aspects of that period, including a statement from anti-tax activist Grover Norquist that about $320 billion in profits returned to the United States led to nearly $17 billion in corporate tax revenue.
According to a mission statement for the coalition, obtained by The Hill from one of its members, the group is also going to stress that a tax holiday is one of the few options left for policymakers looking to give the economy a jolt.
“The likelihood of another stimulus, additional tax cuts, or action by the Federal Reserve is low, and unemployment is still too high,” the statement reads.
This post was updated at 7:08 a.m.