Opposing view: Return foreign earnings to USA

Oct 13, 2011
In The News
By Jim Matheson and Mike Ross

As leaders in entrepreneurship and innovation, American businesses have expanded around the world to grow and compete for the 21st century global customer base.

However, our tax code lags dangerously behind the realities of globalism. Within a year, the nominal U.S. corporate tax rate of 35% will be the highest in the world — a staggering barrier prohibiting American businesses from returning profits home for investment in our economy.

The consequences are clear, especially in these difficult economic times. An estimated $1.4 trillion of American private-sector capital remains overseas that could, and should, be utilized to drive domestic investments in research, capital improvements, pension accounts or job creation.

A bipartisan measure recently endorsed by the Blue Dog Coalition would return these assets to our economy — at no cost to the American taxpayer — by establishing a temporary 5.25% effective tax rate on foreign earnings brought back to the U.S.

Sens. Kay Hagan, D-N.C., and John McCain, R-Ariz., introduced a Senate version just last week, and in a town where partisan gridlock is too often the rule, stakeholders from across the political spectrum — including conservative activist Grover Norquist and labor union chief Andy Stern— support this common-sense proposal.

Opponents of repatriation argue that it would be counterproductive to job growth and deficit reduction. Nothing could be further from the truth. A recent study by a former Clinton administration economist, Dr. Robert Shapiro, and an American Enterprise Institute scholar, Dr. Aparna Mathur, estimated repatriation would generate $8.7 billion in revenue. And former Congressional Budget Office director Douglas Holtz-Eakin recently conducted a study that predicts repatriation would create 1.6 million to 4.2 million jobs. The bill itself even includes a provision that would penalize companies that repatriate earnings but then also cut jobs.

The bottom line is that if we do not act, this money will be spent abroad, strengthening our competitors' economies instead of our own. Repatriation is a common-sense policy that we can implement now to help boost our economy and bring private investments back home. It is time for Congress to act.

Reps. Jim Matheson, D-Utah, and Mike Ross, D-Ark., are members of the Blue Dog Coalition, a group of fiscally conservative Democrats.