Senior Director of Federal Tax Policy
Amidst a massive campaign to convince policymakers to grant U.S. corporations a second repatriation tax holiday, allowing them to pay sharply reduced taxes on overseas profits that they bring back to the United States, Chairman Levin’s majority staff on the Senate’s Permanent Subcommittee on Investigations has issued a timely analysis of how and why the first holiday of 2004 was such a complete failure.
Levin’s staff report adds to the recent drumbeat of analyses that have warned policymakers that a second holiday will not prove any more effective than the first in creating jobs and generating investment in the United States.
“We would not expect a significant change in corporate hiring or investment plans,” Goldman Sachs wrote last week. “Another ‘one-time’ holiday may condition US multinationals to never routinely repatriate any foreign profits because, eventually, Congress can be expected to pass another ‘one-time’ tax holiday. If so, this would constitute a significant structural change in US tax policy.”
A day later, Reuters distributed a story entitled, “Fitch slams proposed U.S. foreign profit tax break,” in which the ratings firm concluded that “a temporary tax holiday for U.S. firms repatriating foreign earnings is unlikely, if passed, to support growth-oriented investment by U.S. firms.”
Now comes the Levin report. Among its findings: