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House Majority Leader Eric Cantor (R-Va.) and Senate Democratic Conference Vice Chairman Charles Schumer (N.Y.) don't agree on much, but both are leading the charge, each in his own way, for companies to get a tax holiday on overseas profits.
As House Majority Leader, Cantor has vocally and repeatedly pushed a tax holiday that is gaining momentum on both sides of the aisle. Schumer is quietly crafting a bill with Sen. Mark Kirk (R-Ill.) to pair a holiday with an infrastructure bank, which has strong support from many Democrats.
Even Republican Rep. Michele Bachmann (Minn.) has made a repatriation the
No. 1 item on her presidential campaign's 11-point economic agenda —
except, in her case, the "holiday" would never end. She would eliminate taxes on overseas profits until the end of the year and keep them at 5 percent thereafter — a small fraction of the current 35 percent corporate tax rate.
With President Barack Obama's
$447 billion jobs package going nowhere on Capitol Hill, backers are pushing repatriation as perhaps the only significant stimulus for the economy on the horizon.
The corporations that would benefit from a tax holiday have naturally engaged in a massive lobbying push, arguing that they could bring back as much as
$1.4 trillion in profits from overseas to invest in the United States. They argue that the current tax code encourages them to keep and invest profits overseas rather than bring the money back to the United States and pay taxes on it.
Bipartisan backing for the idea has been building, picking up support from the Blue Dog Coalition of fiscally conservative Democrats last week in the House, and Sens. Kay Hagan (D-N.C.) and John McCain (R-Ariz.) have teamed up on a bill as well.
Supporters, including the U.S. Chamber of Commerce, say repatriation could create as many as 3 million jobs.
But the idea also has an army of critics from both parties. The conservative Heritage Foundation and some liberal groups have ripped the idea of a tax holiday. A Heritage paper issued earlier this month — in a split from earlier organizational support for the idea — argues that U.S. companies don't have a shortage of capital to invest, and some might simply send the cash right back overseas after taking advantage of the tax break.
Sen. Carl Levin (D-Mich.) has taken a lead role opposing Schumer in the Senate. Levin released a report last week saying that the last such tax holiday, in 2004, didn't create any jobs. Indeed, according to that report, the top beneficiaries actually cut thousands of jobs in the following year.