Corporate Tax Holiday Bill Unites Foes
In Washington lobbying circles, the likes of Andy Stern and Grover Norquist are archenemies, sworn opponents on politics and policy.
But Stern, president emeritus of the Service Employees International Union, and Norquist, Americans for Tax Reform’s chief, oddly enough are pushing for the same piece of tax legislation. Known in wonkland as repatriation, the proposal would allow companies to temporarily bring back to the United States overseas profits for a fraction of the cost in taxes.
The policy has collected an unusual roster of supporters on and off the Hill. Those backers say it may infuse the domestic economy with about $1 trillion.
“Grover’s obviously never met a tax decrease he doesn’t like. Companies obviously have a self-interest,” said Stern, a fellow at Georgetown University’s Public Policy Institute. “People like myself see an opportunity to get money back into the country and potentially to create jobs.”
Stern added that still others see it as a vehicle toward reducing the federal budget deficit. “It’s a public policy that has support not for a singular reason but because it meets different needs,” he said.
The tax rate that companies pay to bring back some overseas profits is
35 percent. The holiday would temporarily lower that rate for one year, to about
Republican Reps. Kevin Brady (Texas), Robert Dold (Ill.) and Devin Nunes (Calif.) recently introduced the repatriation bill along with Democratic colleagues Jared Polis (Colo.), Jim Matheson (Utah) and Jim Cooper (Tenn.).
A cross-section of major U.S. companies and trade associations have gotten behind the measure, including Apple Inc., Duke Energy Corp., Pfizer Inc., the U.S. Chamber of Commerce and the Consumer Electronics Association. Also on board are Google Inc. and Microsoft Corp., which have their own legislative differences.
A coalition called the Win America Campaign is pushing for the tax holiday with the help of lobbying firms Cauthen Forbes & Williams and Capitol Counsel, whose roster includes ex-Rep. Jim McCrery (R-La.), the former ranking member on the Ways and Means Committee.
“When you can bring Andy Stern, Grover Norquist, the business community, and Republican and Democratic Members of the House together, I’d say you are on to something,” said SKDKnickerbocker’s Doug Thornell, who is working for the coalition.
But just because the proposal’s network of supporters is big and strange doesn’t mean it’s going to move.
Some corporate executives and government officials have said they’re worried that should this pass, it could dampen enthusiasm for a broader corporate tax-reform measure. Other opponents argue that the companies won’t use the money to create jobs or stimulate the economy.
But former Rep. Dan Maffei (D-N.Y.), a distinguished senior fellow at the organization Third Way, said that even though it’s unknown how the companies who would repatriate the money would actually use it, the measure still would bring a windfall back to the U.S.
“We think that Congress should take a serious look at it, not just dismiss it as another lobbying effort,” Maffei said. “There aren’t many options for doing stimulus without increasing the deficit.”
Ralph Hellmann, the top lobbyist for the Information Technology Industry Council, said his group wants overall tax reform. But since that debate remains uncertain, Hellmann said the temporary repatriation bill could help solve some of the short-term problems.
“The debt-limit talks are sucking all the oxygen out of the room,” he said.
He noted that the last time Congress offered the overseas profits tax holiday in 2004, it also had the backing of a strange-bedfellows coalition including Sen. Barbara Boxer (D-Calif.) and then-Sen. John Ensign (R-Nev.).
“I don’t think they’d ever worked on anything together,” he said.
Ryan Ellis, who is the tax policy director at Norquist’s group, said the repatriation tax holiday has gained a collection of unusual supporters this time around, too, because “it’s literally money out of the sky.”
“Everybody’s looking for a way to fix this international corporate tax system,” he added. “We aren’t in agreement as to how to do it. Repatriation would at least temporarily provide an escape hatch.”
Ellis disagrees that passing a repatriation measure alone would lessen the chances for overall tax reform. “If that’s your attitude, then you’ll never get anywhere,” he said. “You could be waiting for the rest of your career.”