Members of the House Blue Dog coalition sent a letter to the fiscal super committee this week expressing their support for a corporate tax holiday being vigorously sought by a slew of multinational corporations. The Blue Dogs evidently believe that the tax repatriation holiday — which would allow companies to bring money they have stashed overseas back to the U.S. at a tax rate far below what they would normally pay — would help reduce the deficit:
“As you consider tax reform, we urge you to include a temporary change to the tax code that allows businesses to repatriate money trapped overseas as part of reform or as a bridge to comprehensive reform,” stated a letter obtained by The Hill that was sent Wednesday to the congressional deficit-reduction committee…”We believe that bringing private-sector capital back to the U.S. will strengthen recovery efforts and help reduce the federal deficit,” they said.
Unfortunately for the Blue Dogs, the Joint Committee on Taxation found that a corporate tax repatriation holiday would cost nearly $80 billion, not result in deficit reduction. Unless they are counting on a sudden appearance of the tax fairy, the Blue Dogs are barking up the wrong tree.
The corporations supporting the holiday have a different rationale for pushing the tax break, claiming that nearly tax-free dollars will let them invest domestically and create jobs. But the last time that Congress approved a repatriation holiday, corporations used the money to enrich their executives, cutting hundreds of thousands of jobs.
Versions of a repatriation holiday are now floating around both the House and the Senate, but the fact remains: giving corporations that are sitting on record amounts of cash yet another tax break will do next to nothing to spur the struggling economy. Of course, that hasn’t stopped several Republican presidential hopefuls from supporting the idea. Tea Party Sen. Mike Lee (R-UT) this week proposed lowering the tax on repatriated money permanently.