Recent reports indicate that Speaker of the House John Boehner and House Majority Leader Eric Cantor are debating whether to include a repatriation holiday in the legislative package to extend the payroll tax cut and jobless benefits.
They’ve also been on opposite sides on the issue of repatriation — corporations bringing foreign profits back to the U.S. at lower tax rates. Cantor has been vocal in his support for the process, it’s a favorite of K Street and roughly a quarter of the Republican Conference has signed a letter supporting the idea.
But Boehner is staunchly opposed to tacking it onto the year-end agreement — the optics would be terrible, he thinks, since the Congressional Budget Offices says it adds tens of billions of dollars to the budget. Suddenly, a bill that cuts money would become one that adds to the deficit.
NTU has long been an advocate of fundamental corporate tax reform – lowering the rate and instituting a territorial system. But repatriation – temporarily reducing the tax rate on foreign earnings - is a positive interim step that would bring investment back to our shores and provide a shot in the arm to our ailing economy. Indeed, a recent examination by former CBO Director Douglas Holtz-Eakin on behalf of the Chamber of Commerce found that repatriation could raise GDP by $360 billion over two years and add 2.9 million new jobs to the economy.
But taxpayers wouldn’t be the only ones to benefit by opening a temporary repatriation window. A August study by former Clinton advisor, Dr. Robert Shapiro, has found that repatriation could provide a significant boost to the U.S. Treasury as well. His research found that contrary to the “terrible optics” that Rep. Boehner mentioned, repatriation would produce revenue gains of $8.7 billion over 10 years, compared to the Joint Committee on Taxation’s estimate of a 10-year cost of $78.7 billion.
It’s a win-win for taxpayers and Washington, for the job-focused and deficit-hawks, and for Republicans and Democrats alike. Now is not the moment for intra-party squabbling. It’s time to provide businesses with some relief from our uncompetitive tax rates by including repatriation in any year-end extenders package that House Republicans send to the Senate.