Blue Dog Democrats Push For Tax Break On Overseas Profits

Oct 12, 2011
In The News
By Kristina Peterson

A coalition of moderate House Democrats urged the Congressional deficit-reduction committee to include a temporary tax break for U.S. companies bringing home overseas profits, according to a letter sent Wednesday.

Six lawmakers from the Blue Dog coalition urged the Joint Select Committee on Deficit Reduction to include a repatriation tax holiday in its proposal to trim the federal budget deficit and boost the economy. In a letter sent to the supercommittee on Wednesday, six Blue Dog lawmakers said they backed legislation introduced in the House by Rep. Kevin Brady (R., Texas) that would lower the tax rate to roughly 5% for overseas profits that U.S. multinationals bring back home.

"Without Congressional action this money stays overseas and is invested in foreign economies," the lawmakers wrote in Wednesday's letter. The letter was signed by Reps. Heath Shuler (D., N.C.), John Barrow (D., Ga.), Mike Ross (D., Ark.), Dan Boren (D., Okla.), Dennis Cardoza (D., Calif.) and Jim Matheson (D., Utah).

Earlier in the week, Sens. Carl Levin (D., Mich.) and Kent Conrad (D., N.D.) sent a letter to the supercommittee urging them to do just the opposite and not consider a repatriation tax holiday, citing its cost. The nonpartisan Joint Committee on Taxation has estimated lowering the tax rate to 5.25% for repatriated funds would cost almost $79 billion over 10 years in lost tax revenues. The Senate Permanent Subcommittee on Investigations, which is chaired by Levin, issued a report this week finding that the top 15 companies to benefit from a similar tax break in 2004 later cut a net 20,931 jobs between 2004 and 2007, and slightly decreased the pace of their spending on research and development, while increasing spending on stock buybacks and executive compensation.

The Blue Dog lawmakers said Wednesday that the repatriation tax holiday could serve as a "bridge" to a comprehensive overhaul of the corporate tax code.

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

Under the deal reached to raise the debt ceiling this summer, the supercommittee has until late November to find agreement on how to reduce the federal budget deficit by at least $1.2 trillion over 10 years, or automatic spending cuts are triggered.