Background

  • American companies invest abroad to expand their customer base. Foreign markets represent 95 percent of the world’s population and more than 75 percent of the world’s purchasing power. These foreign operations help worldwide American businesses market their products more effectively to foreign customers by cutting transportation costs and providing competitive local services.
  • This U.S. foreign investment promotes domestic job growth here at home. In fact, American companies with worldwide operations directly employ 22 million American workers and support an additional 41 million U.S. jobs through their supply chain and through the purchases of goods and services by their employees.
  • Current U.S. tax laws make it more costly and more difficult for companies to bring foreign income back to invest in the United States – virtually trapping more than $1 trillion in earnings overseas.
  • The U.S. has one of the highest corporate tax rates, when companies bring a dollar home they have 65 cents left to spend, whereas if they leave it overseas they have upwards of 90 cents to spend.
  • Congress and the Administration have signaled a willingness to reform the tax code, and we all look forward to working together with them on this process. However, we know that such fundamental changes will take time.
  • As a first step toward corporate tax reform, we’re proposing a temporary repatriation period, providing a lower rate that would encourage businesses to bring money to invest here back home.

We all agree our tax system is broken and needs to be fixed, but we shouldn’t wait to invest up to $1 trillion into our fragile economy

  • We strongly support the need for corporate tax reform, but we should move now to allow businesses the power to bring this money home and invest it into our still fragile economy. We have an opportunity right now to strengthen our economy, reduce our deficit, put people back to work, and invest up to $1 trillion in America.
  • Our broken tax system actually penalizes American companies for doing well overseas in the global marketplace when they want to bring those earnings back to America to invest here.
  • Providing American businesses with incentives to bring home their global earnings is a common sense solution that could help inject up to $1 trillion into our economy.
  • There are few other options available that will help ensure that our recovery endures and that it spreads to Main Street. The likelihood of another stimulus, additional tax cuts, or action by the Federal Reserve is low, and unemployment is still too high.
  • A broad range of both economists and elected officials on the right and left agree that enacting measures to encourage businesses to bring earnings back to the U.S. will bolster our recovery, help American businesses better compete against their foreign competitors, create jobs, spur innovation and reduce the deficit.

This money will help strengthen our economic recovery, create jobs, and help reduce the deficit – at no cost to taxpayers

  • In a study on the impact of incorporating a temporary repatriation incentive into the 2009 stimulus package, former Clinton economic advisors Laura Tyson and George Schink estimated that $565 billion of repatriated earnings would increase federal government revenues by about $112 billion during the 2009-2012 period.
  • In a January 2009 study, Dr. Allen Sinai, a distinguished macroeconomist, notes that models show providing innovative American businesses with temporary tax relief could help reduce the federal budget deficit by $47.6 billion a year over five years between 2009 and 2013, and could increase real GDP by an average of $62 billion a year over the same five years.
  • Robert Shapiro, former Undersecretary of Commerce for Economic Affairs, estimates that had the policy been put in place in 2009, it would have produced nearly $45 billion in new federal revenues, including more than $22 billion in direct corporate tax revenues on the repatriated funds and another $22 billion in personal income tax revenues on the additional wage income.

Incentives enacted in 2004 had a positive impact on the economy

  • When repatriation legislation was enacted after 2004, American companies brought home more than $312 billion that would not have been invested otherwise.
  • These companies used $73 billion to create or retain jobs, $75 billion to finance new capital spending, and $39 billion to pay down domestic debt.
  • According to a study by Robert Shapiro, the 2004 tax change produced more than $34 billion in federal revenues, including more than $16 billion in direct corporate income tax revenues and nearly $18 billion in personal income tax revenues from the additional jobs and higher wages supported by the reform.
  • The unemployment rate from 2004 to 2005 dropped by almost half a point, real GDP growth went up 1.3%, and we saw exports increased by $132 billion.

Innovative American businesses brought money back and used it to strengthen U.S. economy.

  • Oracle used repatriated funds to outbid foreign competitors to acquire two U.S. companies – one in California, the other in Minnesota. Oracle’s acquisition increased jobs at both firms, and helped keep the companies and their intellectual property in the United States. Between 2004 and today Oracle has grown its workforce from 42,000 to over 105,000 employees.
  • Qualcomm brought back $500 million, which was used to assist in new acquisitions and the hiring of 8,200 employees. They also invested millions into the U.S. infrastructure, using repatriated funds to expand offices in California, North Carolina, and Nevada.
  • Cisco used repatriated funds to create 1,200 R&D (mostly engineering) jobs. Since the 2004 law went into effect, Cisco has added 8,500 jobs in the United States.
  • Adobe injected over $500 million into the U.S. economy when they repatriated global earnings in 2004. The money was used in a variety of ways including hiring new employees, completing acquisitions of smaller companies, and providing seed money for these companies to spend capital and enter untapped markets.
  • Duke Energy brought back over $500 million in repatriated funds, which was directed towards wages, investments in capital projects, and expansion of its infrastructure and transmission/distribution networks.
  • In 2004, CA Technologies repatriated approximately $580 million and paid $30 million in taxes.  It used these funds to hire, train and compensate workers; for domestic R&D projects; and for acquisitions of U.S. companies like Wily Technology and Niku Corporation, keeping jobs here at home.