With the introduction of a new bipartisan Senate bill, lawmakers and operatives pushing for a corporate tax holiday believe their idea is gaining momentum in the halls of Congress.
Supporters say temporarily allowing U.S. multinationals to bring offshore funds back to the United States at a low rate would not only inject capital into a struggling economy, but bring the necessary support on both sides of the aisle.
“In this day and age of non-stop partisanship, we have brought together a lot of folks who rarely agree. That really speaks to the power of the issue and the growing momentum behind our campaign,” an adviser to the WIN America Campaign, a pro-repatriation group, told The Hill.
But some tax observers remain skeptical, noting that some in the business community feel that a holiday would distract from the larger goal of tax reform.
“I hope that Congress can act quickly so that the president can sign repatriation legislation that will take effect this fall,” Rep. Kevin BradyKevin Patrick BradyYellen confident of minimum global corporate tax passage in Congress 136 countries agree to deal on global minimum tax Rift widens between business groups and House GOP MORE (R-Texas), a member of the House Ways and Means Committee and sponsor of a repatriation measure, said in a Thursday news release.
Still, how repatriation legislation might proceed remains to be seen. On Thursday, Sen. John McCainJohn Sidney McCainProgressives say go big and make life hard for GOP The Biden-Harris train wreck may have its savior: 2024 GOP nominee Donald Trump Kelly raises million in third quarter MORE (R-Ariz.) — who is sponsoring his chamber’s new measure with Sen. Kay HaganKay Ruthven HaganInfighting grips Nevada Democrats ahead of midterms Democrats, GOP face crowded primaries as party leaders lose control Biden's gun control push poses danger for midterms MORE (D-N.C.) — said supporters would try to attach their bill to President Obama’s jobs package.
Over on K Street, lobbyists expect supporters to try to get the issue on the radar of the deficit-cutting supercommittee.
Some lobbyists also say that, with large companies such as IBM and UTC wanting to focus on tax reform, repatriation could have a tough time getting passed out of Congress. Those companies have lined up against WIN America, whose corporate lineup includes such heavyweights as Apple, Cisco, Duke Energy, Google and Oracle.
“For anyone with an interest in this issue, either for or against, now is the time to open up with both barrels,” one K Street source told The Hill, noting that the supercommittee’s recommendations are due in around 50 days. “To hold anything back at this point would be foolish, if only because the other side has let loose its volley and you had better respond in short order.”
Multiple repatriation bills have been introduced in both chambers, with Rep. Shelley Berkley (D-Nev.) and Sen. Mike LeeMichael (Mike) Shumway LeeRetreating economy creates new hurdle for Democrats in 2022 McConnell vows GOP won't help raise debt ceiling in December after Schumer 'tantrum' Senate locks in deal to vote on debt ceiling hike Thursday MORE (R-Utah) among the sponsors.
Brady’s bill, which has support from Democrats including Rep. Jim MathesonJames (Jim) David MathesonMcAdams concedes to Owens in competitive Utah district Trump EPA eases standards for coal ash disposal Utah redistricting reform measure likely to qualify for ballot MORE (Utah), shares some contours with the new legislation from Hagan and McCain.
Both measures would give corporations an opportunity to pay a 5.25 percent rate on repatriated funds, an 85 percent reduction from the current top corporate rate of 35 percent. The two bills also contain penalties for companies that lay off employees while taking advantage of the holiday.
And like other supporters of the idea, McCain and Hagan termed their proposed tax holiday a short-term fix on Thursday, suggesting that it could be a springboard to the central goal of overhauling the tax code.
“I think we need to have comprehensive tax reform, but I think it’s going to take a while to get that,” Hagan said. “And so this is a step that we can move in that right direction right now and get that money working for the American economy.”
But those skeptical of a corporate tax holiday say it could actually impede the push for reform, suggesting that repatriated funds might instead be needed to help pay for lower rates and keep a tax-reform plan revenue-neutral.
Business advocates have said the corporate tax rate needs to be lowered to roughly 25 percent to help make American businesses more competitive. But the Treasury Department said in a 2007 study that even scrapping a wide range of tax credits and deductions would only offset the cost of lowering the rate to 28 percent.
“I’m a little concerned that we may need repatriation to facilitate tax reform,” Roger Altman, a Treasury official under President Clinton, said at a Senate hearing this week. “So I wonder if that shouldn’t be an element in broad-based tax reform, rather than a separate step all unto itself.”