The madness that is the proposed tax repatriation holiday is continuing and gathering steam. More and more members of congress are coming out of the woodwork, scratching their chins in contemplative consideration as it were, pretending that they’ve just realized what a great day a corporate tax holiday would be – not that they’ve taken gazillions of dollars from the firms lobbying for it or anything.
The latest convert seems to be Nevada Democrat Shelley Berkley. Berkley’s plan is to offer a pseudo-holiday – not the full-fledged happy-ending massage the companies wanted (i.e. a reduction from 35 percent+ to 5.25 percent) but a mere ten-point shave:
Representative Shelley Berkley, a Nevada Democrat, is the latest lawmaker to consider legislation allowing multinational companies to send offshore profits to the U.S. at a reduced tax rate.
Her proposal, which was confirmed yesterday by Berkley’s communications director, David Cherry, would allow companies to return profits to the U.S. at a 25 percent tax rate, 10 percentage points below the maximum statutory rate. Most companies publicly supporting a holiday, such as Duke Energy Corp., have spoken favorably of the 5.25 percent rate that is being offered by Representative Kevin Brady, a Texas Republican.
One thing that people must understand about this tax repatriation business is that it’s a wholly bipartisan affair. It’s not solely the work of evil Republicans. This is a scheme that requires heavies in both parties to help ram the knotty, hard-to-sell legislation through. On the Democratic side, unsurprisingly, the main actor is going to be Chuck Schumer. John Kerry is also involved with this nastiness. Barbara Boxer led the 2004 effort and the failed 2009 campaign to get a holiday, and is rumored to be lurking somewhere in this business.
Note that Cisco, a California corporate heavyweight and one of the companies lobbying most ravenously for this tax holiday, has been a consistent lifelong contributor to Boxer. You’ll find Cicso is also a contributor to most of the other congressional allies in the repatriation holiday effort, as are companies like Motorola, Merck , Pfizer, Proctor and Gamble, Ford, and others.
If you would like to contact Rep. Berkley and tell her how much she would suck if she voted for this thing, here’s the form.
I’m still shocked at the lack of press coverage of this. In all this scratching and clawing over dimes here and there, and clamoring for trillions in cuts, we’re seriously considering what amounts to a gigantic new systematic loophole for corporate taxes?
Again, if they pass this thing one more time, the fiction of the "one-time holiday" disappears forever, and the next decade will see an explosion of exported profits, “transfer pricing,” and cunning use of correspondent banks to stealth-repatriate offshored funds. Everyone will know that the effective corporate tax rate has been dropped from 35 percent to 5 percent – all companies need to do is hide profits overseas and bring them back about once every presidential term or two.
This has the doubly negative effect of lowering revenue during the holiday years and reducing job investment in the intervening years, as private business revenue is kept outside the borders of the U.S. instead of staying here and dumped into the economy. Naturally, since this is the exactly stupidest thing federal lawmakers could consider doing, they are doing it.