Tea Party Sen. Mike Lee (R-UT) — when he isn’t badly mangling the U.S. Constitution — wants to take a hatchet to the federal budget, proposing a program that “would require slashing every government program that’s not defense or Social Security (Medicare, Medicaid, veterans affairs, education, and so on) by 89.6 percent.” But at the same time, judging by a new proposal he released today, he wants to gift multinational corporations with a permanent tax break worth tens of billions of dollars.
A slew of multinational corporations — even though they already pay exceedingly low taxes — have been pushing for the enactment of a tax repatriation holiday, which would allow them to bring money they have stashed overseas back to the U.S. at a tax rate dramatically lower than the statutory 35 percent. The corporations want a short window in which this low tax rate would apply. But Lee has decided that he would just go ahead and make the holiday permanent:
Today, Senator Mike Lee submitted legislation that would create millions of new jobs and inject $1 trillion into the American economy by significantly reducing the excessive tax on repatriated assets. Sen. Lee’s proposal would permanently lower the tax rate for businesses from 35% to 5% on money earned overseas and brought back to this country…Unlike recent repatriation “holidays,” which last a short period of time, Senator Lee’s bill would make the repatriation rate permanent.
“We should be lowering those barriers and encouraging American companies to invest in this country, increase wages, and create new jobs,” Lee said. Lee joins House Budget Committee Chairman Paul Ryan (R-WI) in calling for this permanent corporate giveaway. Not only do these sorts of moves not create jobs, but, according to the Joint Economic Committee, lowering the tax on repatriation to 5 percent would cost more than $78 billion.
But this wasn’t the only bad repatriation idea to surface today. Sens. John McCain (R-AZ) and Kay Hagan (D-NC) introduced a bill that would lower the rate on repatriated money to 8.75 percent, and lower it further to 5.25 percent if the company in question can prove it created jobs (thereby admitting that a lower rate doesn’t automatically translate into job growth?).
In a statement, Bob Keener of Business for Shared Prosperity said that the McCain-Hagan bill “would hurt small and medium-sized businesses, by taking money from the Treasury that could be invested in public infrastructure and services that they depend on — and urgently need now.” But no matter how much data is brought to bear showing how poorly repatriation holidays have worked out, lawmakers continue to treat them as a panacea for the struggling economy.