WASHINGTON D.C. – Today, Senator Mike Lee submitted legislation that he said 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 percent to 5 percent on money earned overseas and brought back to this country.
“American companies want to bring their earnings back here, build out their infrastructure, and invest in their domestic workforce, butcurrent law makes it punitive to do so,” he said in a press release. “We should be lowering those barriers and encouraging American companies to invest in this country, increase wages, and create new jobs. My bill is a common sense reform that helps businesses, workers, investors, and Americanindustries across our economy without using mandates and regulation, or having the federal government pick winners and losers.”
Unlike recent repatriation “holidays,” which last a short period of time, Lee said his bill would make the repatriation rate permanent and give American businesses the confidence they need to bring their earnings home and the stability they require to invest in jobs rather than one-time capital investments. Previous one-time “holidays,” such as the one in 2004, have been used to minimal effect because the short-term duration of the benefit does not incentivize companies to invest in long-term business infrastructure or new employment, he said.
“The President is currently traveling the country trying to convince Americans to borrow another half-trillion dollars from the Chinese to ‘stimulate’ the economy,” Lee said. “My amendment would stimulate our economy by more than twice his proposal without saddling future generations with more debt.”
Studies, such as one conducted this summer by J.P. Morgan, reveal undistributed earnings from American companies’ foreign operations could be closer to $1.4 trillion, which sits on the sidelines as a result of the 35 percent tax rate. Research by a former Congressional Budget Office director predicted repatriation could create close to 3 million new jobs.
Lee’s legislation is Amendment 691 to S. 1619, which is currently being considered by the Senate. In the case that Majority Leader Harry Reid would prevent amendmentsfrom being added to S. 1619, Lee would offer the amendment as stand alone legislation.