Sen. Chuck Schumer’s tax holiday plan would take from rich corporations and give to an infrastructure bank, whose job-creating projects would help guard against future calamities like the Minneapolis bridge collapse six years ago. (EPA)
Chuck Schumer has not given up on the idea of a corporate tax break on profits parked overseas, The Post has learned.
New York’s senior senator is telling some business leaders that wooing the estimated $1.7 trillion in profits US multinationals have on deposit offshore is a good idea, sources said.
Schumer, sources said, would like to give the companies a tax holiday in which they can repatriate foreign money at an 8 percent rate as opposed to the present 35 percent.
While sources close to the lawmaker say Schumer has not attached a time frame to introducing a bill for such a tax holiday, one executive said he expects it to come this year.
“[Schumer] thinks it will be done by the end of the year,” said a source who recently spoke with the Brooklyn Democrat.
If every dime of the $1.7 trillion came back to the US, it would amount to a $136 billion gain for Uncle Sam.
Estimates are that the government can more realistically expect roughly $50 billion in proceeds from such a tax holiday.
As with a 2011 tax holiday bill supported by Schumer, the thinking this time, sources said, is that the money would go to fund an infrastructure bank.
That bank would use that cash to leverage itself and then have perhaps $300 billion to invest in infrastructure projects.
A Schumer spokesman said, “[Schumer is] busy with guns and immigration reform right now, so while it’s possible he revisits the idea in the future, he’s not doing anything right now.”
The senator has been down this road before and not that long ago.
In the summer of 2011 he failed to galvanize sufficient support for a similar proposal that was connected to the Obama jobs bill.
Schumer voted for a 2005 foreign earnings tax holiday that passed Congress and has since been roundly criticized for being a big corporate tax break that did little to help the economy.
That measure lowered the tax rate for repatriating overseas profits to 5.25 percent.
Sen. Carl Levin said in a report, “[I] found that the companies that took that tax break failed to create new jobs and instead boosted executive paychecks. It was a complete bust.”
Now, however, the wind may be at Schumer’s back.
“I think the issue [of some sort of change to the foreign earnings tax] is gaining strength,” a well-placed DC source said.
The Senate Committee on Finance next week plans to get feedback from members and publish a paper on changing the tax treatment of foreign earnings.
The poster child of the foreign earnings dilemma emerged this week with tech titan Apple borrowing $17 billion to pay shareholders.
Apple CFO Peter Oppenheimer, explaining why it was borrowing money for the first time since 1996 — when it had roughly $143 billion in cash on balance sheet — said, “Repatriating this cash would result in significant tax consequences under current US tax law.”