economy in the U.S. has been rough on many companies over the last few years.
Many of the major U.S. tech companies have huge amounts of money sitting in
overseas accounts that they argue could be used to fund hiring and other
programs at home.
The catch is that the tax rate on bringing that foreign money home is a
blistering 35% according to CNN Money. These companies are backing
a major lobbying campaign to get lawmakers in Washington to give them a tax
holiday that would allow the foreign money reserves to be brought home at a
massive savings on tax day. The major companies are lobbying for a tax rate on
the money in the area of 5%.
The lobbying push is still in the planning
stages, but so far major tech firms Oracle, Cisco, and Apple are backing the efforts.
Other major companies include Duke Energy and Pfizer. Between these firms, they
have an estimated $1 trillion squirreled away in foreign accounts.
The lobby effort hopes to win that steeply discounted 5% tax holiday for
backers for a full year. The goal is to get the tax holiday included in the
reform package. If the overall reform package fails in Congress, CNN
Money reports that the firms will attempt to push their tax holiday
The fight for the tax holiday is going to be hard on the companies and the
lobbyists. Congress approved a similar tax holiday in 2004 as part of a package
to promote new jobs in the U.S. and many of the companies that took advantage
of the holiday to bring foreign money home instead used the money as dividends
for shareholders. A study that looked at the holiday conducted by the National
Bureau of Economic Research found that for each dollar of cash brought home in
that holiday the companies bumped shareholder payouts in the area of 60 to 92
Kristin Forbes, co-author of the study, said, "A tax holiday would bring a
substantial amount of cash back to the United States and paying that out to
shareholders is good for the economy. But if you're a politician claiming this
will create a lot of jobs or new investment, it isn't supported by the
This time around the companies aren’t hiding the fact that some of the loot
brought home would be handed directly to shareholders. However, the companies
are also claim that the tax holiday would allow them to boost markets and
increase consumer confidence and the tax revenue from bringing the funds home
could allow as much as $50 billion in credits to encourage new hiring.
quote: There's a tax treaty between the two countries covering earned income - basically the income tax I paid to Canada gave me a tax credit which I could apply to my U.S. income tax (since Canadian income taxes were greater, I paid no U.S. income taxes).