A corporate tax holiday would be like a stimulus for the private sector, a new report argues.

{mosads}Douglas Holtz-Eakin, the author of the report, argues in his study that allowing U.S. multinationals to bring the estimated $1 trillion in profits stashed abroad into the country at a much lower tax rate could conceivably create 2.9 million new jobs. 

Holtz-Eakin, an economic adviser to Sen. John McCain’s (R-Ariz.) 2008 presidential campaign, also asserted that a repatriation holiday could lay the groundwork for a broader overhaul of the corporate tax code. 

“It’s absolutely the case that it looks like there could be substantial impacts, and it’s way better to have the impacts here than to have it parked offshore,” Holtz-Eakin said at a Wednesday event hosted by the U.S. Chamber of Commerce, which released the report.

Holtz-Eakin’s study comes as large corporations, including Oracle and Cisco, press for a repeat of a tax holiday enacted in 2004. Rep. Kevin Brady (R-Texas), a senior member of the tax-writing House Ways and Means Committee, has introduced a bill that would implement a similar holiday, and the idea has the backing of House Majority Leader Eric Cantor (R-Va.).

Liberal groups and other skeptics have declared that enacting another holiday would encourage companies to store an increasing amount of profits abroad, in anticipation of future holidays. Studies of the previous holiday have also shown that repatriated funds were used more for stock buybacks than for job creation.

Holtz-Eakin acknowledged in his study that repatriated funds would be used for dividend payments and other financial transactions, but argued that the tax break would also help the economy by putting cash into the hands of investors and consumers.

The study also expresses hope that a repatriation holiday would spur a move toward taxing corporations only on profits made in the United States — the so-called territorial system.

As it stands, multinationals are taxed on profits made worldwide, but can defer paying until that money is brought into the United States, an approach Holtz-Eakin and other proponents of the territorial system say impedes American competitiveness.

Holtz-Eakin arrived at his estimates of 2.9 million jobs and a $360 billion increase in gross domestic product in part through a survey of 10 corporations, which he calls more of an anecdotal examination in the study.

“In trying to do the survey quickly, I don’t think we did it well,” Holtz-Eakin said at the Chamber event.