Dem lawmaker: Political reasons to link repatriation to jobs

At the same event, Rep. Loretta Sanchez (D-Calif.) shared Polis’s view that companies should be able to use funds brought to the U.S. through a repatriation holiday in whatever way they wished.

But some officials skeptical of a new holiday have said that much of the estimated more than $300 billion that came to the U.S. as a result of the last go-round was used to buy back stock or pay dividends rather than to hire new workers. 

{mosads}A Congressional Research Service report found the companies that gained the most from the last holiday actually cut jobs. 

Because of all that, Polis said he supported proposals like one from Rep. Kevin Brady (R-Texas) that would include disincentives for companies to repatriate funds but then get rid of workers.

Supporters are pushing hard for the tax holiday, calling it one of the few stimulative policies officials can turn to right now. U.S. multinationals have roughly $1 trillion parked offshore at this time; much of that, supporters say, will not come into the country unless enticed by a lower tax rate. 

The holiday enacted in 2004 allowed corporations to repatriate offshore profits at a 5.25 percent rate. The top corporate tax rate currently is 35 percent, but companies can defer paying that on profits made abroad until they bring the money into the U.S.

For their part, the Obama administration and Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, have essentially signaled that they would prefer to look at repatriation within the broader scope of tax reform. 

Camp, for instance, and other Republicans have said they would like to see the U.S. move to a territorial system, which basically means that corporations would pay taxes just on profits made in America.

A recent analysis from the Joint Committee of Taxation also said that at least one generic holiday, after being profitable in the early years, would lose close to $80 billion over a decade.

But Andy Stern, the former president of the Service Employees International Union, and other attendees at the Third Way event questioned the nonpartisan committee’s take. 

Stern – who also said he thought a tax holiday might be bad policy in an “academic sense” – added he thought officials would come around on the idea of a holiday, given the challenges that broader tax reform faces.

“In the end, just like the president said, ‘I’ll never agree to extending the Bush tax cuts,’ it’s better than other alternatives,” Stern said. “And there aren’t many more other alternatives.” 

Jim Rogers, the chief executive of Duke Energy, also told attendees that, if a holiday were enacted, he did not think companies would start parking more profits offshore expressly in anticipation of another one – another criticism often lobbed at the idea.  

“We have much more offshore today, but that also reflects the growth of the investment opportunities around the world,” said Rogers, whose corporation is a member of the Win America Campaign, a coalition pushing for the holiday. 

All that said, there is still some disagreement among those open to a holiday about how low the rate should go. Sanchez and Stern both said they would like to see it higher than 5 percent.