The technology industry has lined up a political dream team in its fight for a tax break on more than $1 trillion in profits earned overseas.
Supporting players include Democratic and Republican lawmakers, tea partyers and outside organizations such as Grover Norquist’s Americans for Tax Reform.
The White House, however, shows no sign of embracing proposals to slash the 35 percent tax rate on profits that multinational companies want to bring home. The administration dealt supporters another blow Monday by leaving the concept, known inside the Beltway as repatriation, out of its $4.4 trillion deficit reduction plan that President Barack Obama unveiled in a Rose Garden speech.
Companies that make a significant amount of money overseas argue that the high U.S. tax rate on returned profits prevents them from bringing that money back to the country and investing it in new projects here.
It is one of several areas where Silicon Valley executives and their lobbyists are growing frustrated that Obama — once ballyhooed as the “tech president” — has failed to advance many of the policies they see as crucial to their industry and economic recovery.
“The technology industry — the Ciscos and Oracles of the world — has been completely enmeshed in this administration from a rhetorical standpoint from the get-go, but when it comes to results, they have gotten very little,” a Democratic technology lobbyist said. “Every time they ask for something, the administration doesn’t deliver.”
Jason Mahler, vice president for government affairs at Oracle, agreed. “We’ve tried to put forward some things that we think help bring the economy back, including repatriation, and [members of the Obama administration] haven’t really taken an interest,” he said.
“Some of the rhetoric on tax policy coming out of the administration has been disappointing, whether it’s characterizing global companies that have to operate in other markets to compete as bad actors or whether it’s repatriation,” said Bret Wincup, director of government relations at the Information Technology Industry Council. “We, as tech companies, tend to get lumped into the rhetoric of shipping jobs overseas.”
But the dismal economic outlook and endorsements from prominent Democrats, including former Democratic National Committee Chairman Howard Dean, have given repatriation advocates renewed hope that a tax holiday can be nailed down this year. Supporters have formed the “Win America” public relations campaign run by SKDKnickerbocker, the PR firm that managed President Barack Obama’s election and is home to Anita Dunn, Obama’s former communications director.
“If there was ever a time to cut a deal on this, it’s now,” said a technology industry lobbyist involved in the effort. “If it doesn’t happen between now and December, it won’t happen in an election year, and the money will be reinvested overseas.”
In blog posts and interviews, the administration has repeatedly dismissed the notion that lowering the tax would boost the economy, citing the expense of a previous tax holiday in 2004.
“We’re not going to do that, repatriation outside of corporate tax reform, because for the simple reason that it costs a lot of money,” Treasury Secretary Timothy Geithner told CNBC last week. “It costs between $20 [billion] and $80 billion to do that over 10 years, and if you’re going to do that, you have to be able to pay for it, and how are you going to raise taxes on the 96 percent of companies across the country that don’t benefit from repatriation?”
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