January 29, 2015 05:15 PM | Permalink |
Following is a statement by Robert McIntyre, director of Citizens for Tax Justice, regarding the announcement by U.S. Senators Barbara Boxer (D-CA) and Rand Paul (R-KY) of a proposed “repatriation holiday” that would reward companies currently holding large amount of cash in foreign countries, including tax havens.
“A repatriation tax holiday was a bad idea when Congress last enacted one in 2004. The only difference now is that it’s a bad idea with a track record. The plan would reward companies that have hidden their U.S. profits in offshore tax havens by letting them pay a 6.5 percent tax rate on those profits, less than a quarter of the 35 percent tax rate that should apply.
“Sens. Boxer and Paul say their tax holiday will help pay for transportation infrastructure. But it’s ludicrous to argue that a tax holiday can be used to pay for anything since repatriation holidays don’t raise revenue—they lose it. The Joint Committee on Taxation has consistently found that repatriation holidays raise some revenue in the very short term, but lose revenue over the long term.
“If Congress acts on the Boxer-Paul plan, the next sensible step for big multinationals will be to shift even more profits offshore on paper and wait for Congress to enact the next tax holiday. At a time when Congress should be taking steps to discourage corporations from hiding their profits in offshore tax havens, the Boxer-Paul plan would give these companies an incentive to stash even more profits abroad.”
See CTJ’s report on the pitfalls of repatriation tax holidays for more information.