Today, Americans for Tax Reform and 30 other free market groups sent the following letter to Speaker Boehner urging repatriation to be enacted this year:
Dear Speaker Boehner:
It is very likely that Congress will pass a tax revenue bill before the end of this calendar year. We write to you today to urge that this bill include a provision allowing U.S. employers to “repatriate” money from overseas back home to the United States.
The U.S. is one of the only countries that taxes income earned overseas by her own taxpayers. A French company earning a profit in the United States pays taxes to the IRS, but never has to pay tax to the French authorities. An American company earning a profit in France, however, must pay tax to the French government, and then pay an additional tax to the IRS should they want to bring that money back to the United States. The amount that must be paid to the IRS is the difference between the U.S. corporate income tax rate of 35% (tied for highest in the developed world), and the tax already paid overseas. Most of the time, this means that employers looking to bring capital back to the United States must pay an additional tax to the IRS of well over 10 percent, and in some cases as high as 35 percent.
Not surprisingly, this punitive tax treatment incentivizes companies to keep earnings overseas. Today, $1.4 trillion is sitting in foreign bank accounts, effectively unable to come to America because of this anti-competitive tax treatment. Industry estimates calculate that alleviating this tax burden in 2012 will result in a capital inflow to the United States of at least $800 billion. That’s non-inflationary, non-stimulus wealth flowing into the country in order to create jobs and invest in America.
This was tried in 2005, and the results were successful. Over $300 billion flowed into America that year as a result of repatriation. Because a small tax of 5.25% was imposed, the Treasury received a revenue windfall of nearly $20 billion. Should a similar repatriation opportunity exist in 2012, it’s reasonable to expect $800 billion to flow into the United States with a Treasury revenue windfall of over $40 billion.
Over time, the U.S. must move from a “worldwide” tax regime that seeks to tax U.S. employers all over the world. Instead, we should adopt a “territorial” regime which only seeks to tax profits earned within the United States. This is the system our global competitors use, and it’s an essential step toward making our country a good place to create jobs and do business. Repatriation is a good step in the direction of territoriality, and should be seen as progress toward that goal.
For the sake of job creation here at home and as a down payment on fixing our broken and anti-competitive tax laws, we urge you to enact repatriation before the year is over.
60 Plus Association, Jim Martin, Chairman
American Family Business Institute, Dick Patten, President
American Values, Gary L. Bauer, President
Americans for Prosperity, Phil Kerpen, Vice President
Americans for Tax Reform, Grover Norquist, President
CatholicVote.org, Brian Burch, President
Center for Individual Freedom, Jeffrey L. Mazzella, President
Citizen Outreach, Chuck Muth, President
Citizens for Limited Taxation, Chip Faulkner, Associate Director
Citizens for the Republic, Bill Pascoe, Executive Vice President
Club for Growth, Chris Chocola, President
Coalition for a Fair Judiciary, Kay R. Daly, President
Competitive Enterprise Institute, Iain Murray, Vice President
ConservativeHQ, Richard A. Viguerie, Chairman
Cost of Government Center, Mattie Duppler Corrao, Executive Director
Council for Citizens Against Government Waste, Thomas Schatz, President
Florida Center Right Coalition, Richard Watson, Chairman
Free Congress Foundation, James S. Gilmore III, President and CEO
Frontiers of Freedom, George Landrith, President
Georgia Center Right Coalition, Louie Hunter, Chairman
Hispanic Leadership Fund, Mario H. Lopez, President
Institute for Policy Innovation, Tom Giovanetti, President
Less Government, Seton Motley, President
Let Freedom Ring, Colin A. Hanna, President
National Center for Public Policy Research, Amy Mortiz Ridenour, President
National Taxpayers Union, Duane Parde, President
Small Business and Entrepreneurship Council, Karen Kerrigan, President and CEO
Taxpayer Protection Alliance, David Williams, President
The Heartland Institute, Eli Lehrer, Vice President
U.S. Chamber of Commerce, R. Bruce Josten, Executive Vice President