Blue Dogs backing corporate tax holiday

Although there's still plenty of skepticism about the idea, repatriation is gaining support on Capitol Hill, where lawmakers are seeking the best avenue to pass a bill, including one that goes through the supercommittee.

The Blue Dog Coalition is backing a bipartisan bill sponsored by Reps. Jim MathesonJames (Jim) David MathesonTrump EPA eases standards for coal ash disposal Utah redistricting reform measure likely to qualify for ballot Trump's budget targets affordable, reliable power MORE (D-Utah) and Kevin BradyKevin Patrick BradyDemocrats, GOP spar over Treasury rules on Trump tax law Ex-HHS chief threatens to vote 'no' on surprise medical billing measure Bipartisan Ways and Means leaders unveil measure to stop surprise medical bills MORE (R-Texas) that would remove a barrier keeping upwards of $1.4 trillion in American private-sector money overseas, which is similar to a Senate bill introduced last week by Sens. Kay HaganKay Ruthven HaganCoronavirus poses risks for Trump in 2020 GOP braces for Democratic spending onslaught in battle for Senate Democrats will win back the Senate majority in 2020, all thanks to President Trump MORE (D-N.C.) and John McCainJohn Sidney McCainMeghan McCain says Steyer should drop out: 'I hate that guy' Sanders says idea he can't work with Republicans is 'total nonsense' GOP casts Sanders as 2020 boogeyman MORE (R-Ariz.).

Blue Dogs said in the letter that the House bill will "entice American companies selling their goods and services abroad to bring earnings back to the United States for investment."

ADVERTISEMENT

"Experts agree that temporarily lowering tax barriers will bring earnings back home, and therefore strengthen our economy," the Blue Dogs wrote. 

"We believe that bringing private-sector capital back to the U.S. will strengthen recovery efforts and help reduce the federal deficit," they said. 

"Therefore, we urge you to consider this as part of your larger efforts."

The Hagan-McCain bill would let multinationals repatriate funds at an 8.75 percent rate — or 75 percent lower than the current top corporate rate of 35 percent. 

Companies could also push that rate to as low as 5.25 percent if they add onshore jobs in 2012. To get the lowest rate, companies must increase their number of employees subject to the payroll tax by 10 percent. 

The 5.25 percent figure, 85 percent below the top corporate rate, is the same rate used in a corporate tax holiday enacted by Congress in 2004.

ADVERTISEMENT

The rate also is the lowest that can be reached in the Matheson-Brady measure. 

Proponents of another tax holiday say the idea could get the ball rolling on broader tax reform, which is a possible subject that could be tackled by the supercommittee. 

The Hagan-McCain and Brady-Matheson measures includes penalties for corporations that repatriate earnings and reduce their workforce. 

Critics of the 2004 holiday, including Democratic Sen. Carl LevinCarl Milton LevinThe Trumpification of the federal courts Global health is the last bastion of bipartisan foreign policy Can the United States Senate rise to the occasion? Probably not MORE (Mich.), argue that the plan won't work and that, according to a report he released this week, the tax break has the opposite effect of supporters' arguments for it. 

Opponents also argue that the cost is too high — the price tag is running about $78 billion over a decade, according to the Joint Committee on Taxation.

Meanwhile, Blue Dogs point to a study by Douglas Holtz-Eakin, former director of the Congressional Budget Office, showing a 4 percent economic expansion and the creation of between 1 million and 4 million jobs.

House Majority Leader Eric CantorEric Ivan CantorThe Democrats' strategy conundrum: a 'movement' or a coalition? The biggest political upsets of the decade Bottom Line MORE (R-Va.) is among the idea's most prominent supporters.

Still, many — including the White House and House Ways and Means Committee Chairman Dave Camp (R-Mich.) — are urging caution on any plan to provide a large tax break as a separate entity rather than as part of a sweeping effort to overhaul the tax code.